RBI's Step to Check Credit Card Fraud

From August 1, you need not think twice before letting your credit card out of sight at a restaurant, petrol pump or any other merchant establishment. The details printed on your card including the card number, expiry date and three-digit card security code (popularly known as the CVV) will not be enough to make fraudulent online transactions.

A RBI directive has ensured that from August, credit and debit card-issuing banks must provide for additional authentication of information over and above what is visible on the physical card. In other words, the cardholder must key in an extra security code or some other data to complete a online transactions.

This consumer-friendly instruction, issued by the RBI on February 18, also mandates a system of online alerts to the cardholder for all `card not present' transactions that exceed Rs 5,000. The circular adds that banks would be penalised for non-adherance to the directive under the Payment and Settlement Systems Act 2007.

In an email response to TOI, RBI though specifies, "Banks are free to decide on the technology they wish to use to fall in line with these instructions.'' On their part, banks have been beefing up their online security. Virtual cards, which have been around for a while, are a secure option offered by the likes of HDFC Bank, ICICI Bank and Kotak Mahindra Bank. HDFC's NetSafe, for one, creates a code that can be used for one-time transaction. "It is a limited period validity number,'' says Sanjeev Patel, EVP and head, direct banking channels, HDFC Bank.

Virtual cards create a code separate from your CVV number so you don't have to key it in on the merchant website. Any unused amount from the card is credited back to the credit or debit card account.

Banks also offer increased security via MasterCard's Securecode and Visa's Verified by Visa, which offer personalised passwords. T V Seshadri, vice-president and country general manager, South Asia, MasterCard, says, "Much like the authentication process required for payment card use at ATMs, SecureCode requires cardholders to enter their personal code in an online window on their PC before a transaction can be processed. Even if someone knows their credit or debit card number, the purchase cannot be completed without their SecureCode at a participating merchant.''

But these initiatives can work only if the cardholder is prompted to enter the code by the merchant site. Says Seshadri, "The card-issuing bank, the retailer and the retailer's acquiring bank will all have to participate. Even if one of these entities does not participate, the cardholder is not prompted to enter the SecureCode.'' Seshadri, though, adds that a number of banks in the country no longer allow their cardholders to transact on e-commerce sites without entering such the code.

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Electronic Cards from ICICI

ICICI Bank has come out with electronic cards for its customers in association with mChek, India’s one of the leading mobile payment solution provider. These cards will be issued to the mChek application on the customer’s mobile phone.

Visa International, the leading international electronic payment network had earlier approved mChek as a platform to which the issuer can issue an electronic mChek Visa card to deliver the convenience of mobile transaction with added security.

The customer can use the mChek Visa Credit / Debit card to perform various transactions like bill payments (postpaid, other utilities), prepaid recharge, money transfers, pay insurance premiums, buy air tickets, movie tickets or perform any other merchant transactions using their ICICI bank debit card or credit card account.

The card data is stored in a fully encrypted form on the phone which ensures full security and reduced risk of fraud for card based transactions

Cobranded Credit Card from ICICI Bank and Singapore Airlines

ICICI Bank in association with south-east Asian air-carrier Singapore Airlines has launched the co-branded 'ICICI Bank Singapore Airlines Visa Platinum Card' in the Indian market.

"This is the first time that we (Singapore Airlines) have launched a credit card in India. The synergy that is created by this partnership is unprecedented," Singapore Airlines' Regional Vice-President (West Asia and Africa) Lee Lik Hsin said at the launch function.

Singapore Airlines is confident that the card would bring unparallel benefits to its loyal customers and further boost the appeal of KrisFlyer programme in India, Hsin said.

KrisFlyer is Singapore Airlines frequent-flyer programme under which its enrolled members can redeem their miles for free flights on over 20 global airlines to more than 820 destinations across 160 countries.

ICICI Bank has issued 7.5 million credit cards in India of which around 10 per cent are in the premium segment. Singapore KrisFlyer programme claims to have 80,000 members enrolled in India.

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ICICI Bank loses Rs 11.47 cr in Credit Card Fraud

One of the largest private sector lending institutions ICICI Bank lost more than Rs 11 crore due to over 8,000 cases of credit card

There were 8,280 cases reported by the ICICI Bank to the Reserve Bank of India, in which it lost Rs 11.47 crore between April and December 2008, Minister of State for Home Shakeel Ahmad said in reply to a question in the Lok Sabha.

A total of 703 and 2,484 cases were received by American Express Bank and HSBC Bank related to credit card frauds, in which they lost Rs 6.04 crore and Rs 4.90 crore, respectively.

According to the data, a total of 12,959 such cases were received during the said period in which various banks lost Rs 36.54 crore.

No cases were reported by IDBI Bank, Canara Bank and Indian Overseas Bank related to credit card frauds last year.

Other banks, which lost significant amount to such practices, were Citibank, which bore a loss of Rs 4.73 crore, Standard Chartered Bank Rs 2.39 crore and Deutsche Bank with a loss of Rs 2.09 crore.

Many nationalised banks were also affected by the fraudulent activities.

Banks cutting credit card limits for Satyam staff

The Satyamites, who were amongst the most pampered employees in the industry till recently, are feeling the pinch of the Satyam fiasco not only in office but also outside.

Banks seem to have brought their rating down by significantly bringing down the cash/credit limits on their credit cards.

At least two banks, ICICI Bank and HDFC Bank, have cut down the credit limits on the cards of the ill-fated Satyam’s employees in the recent past while reports sayHSBC and Citibank have followed suit.

“To complete uncertainty over our job and salary, the message on cut in credit limit on Credit cards has added insult to injury of Satyam employees.”

“While we have nothing against Satyam employees, it is true that the credit has been cut,” said an ICICI Bank official over phone from Mumbai adding that it is a “precautionary” measure.

“We are also answerable to our shareholders. Credit card is an unsecured loan. If there is a possibility of default between a housing/auto loan and a credit card payment, the latter will be stopped,” he said.

It is the prudence of any banker to be sceptical while the source of income (job) itself is doubtful, he added.

Another senior Satyam staffer, who did not want to be identified, said that HDFC Bank had brought down his credit card limit from Rs 3 lakh to less than Rs 2 lakh and informed him about it.

Mr Paramesh (name changed) has a more painful experience when his HSBC Card declined honouring a payment at a supermarket this morning.

“I have no intimation on this and am shocked how things can go wrong all of a sudden,” he said. When contacted, HSBC officials declined to comment on the issue.

According to sources, the banks operating the salary accounts are also instructing their staff to “keep in view” any outstanding payments on advances from the employees before crediting the next salary.

More Credit card bills get Loan Lifeline

Banks are increasingly allowing borrowers to convert credit card dues into personal loans in a bid to stave off defaults triggered by inflation and rising rates. All leading banks are offering investors an option to pay for purchases in installments. While some are being proactive, others are offering them as part of a restructuring package after classifying the customer as delinquent.

According to the Reserve Bank of India (RBI), credit card transactions amounted to over Rs 60,000 crore between May 2007 and May 2008. RBI data also show that around 20% of card transactions were rolled over, resulting in Rs 12,000 crore of credit card receivables, which are classified as loans by banks. In the previous year, the amount classified as loans was less than 10% of credit card transactions. Rising interest rates and prices are eating into the disposable income of borrowers, increasing the chances of default.

Dues under a credit card after the initial interest-free period attract interest rates of over 18-38%. As against this, personal loans are available at rates starting from 14%. Although this facility of allowing cardholders to pay for purchases in instalments has been available for some time, banks have recently started becoming more proactive. In some cases, banks suggest it as soon as a customer makes a large transaction. Other banks make this offer when a customer fails to make a large payment. At present, SBI Cards offer the EMI scheme on transactions of more than Rs 2,500.

Banks start monitoring customers who have not been consistent with their payments. “We have an idea about customers’ spending patterns through the transaction monitoring alert system. If a customer spends an average of Rs 8,000 on his credit card every month and suddenly we witness a transaction of Rs 50,000 billed in his name, we call the customer. We inform the customer that he/she has an option to convert it into EMIs, which could weigh lesser on his pocket,” said ICICI Bank head, cards group, Sachin Khandelwal.

If a customer planning to buy an appliance for Rs 20,000 ends up spending Rs 40,000 on a higher-end product, we offer these options to customers at the store itself, Mr Khandelwal added.

Cards have also replaced the traditional way of consumer durable financing through dealerships, which turned out to be costly.

Citibank offers the conversion of the outstandings on cards into personal loans . However, these customers would still be reported to the credit bureau. “Customers who become delinquent are also offered special instalment programmes called ‘settlements,’ which ensure structured payments in a timely manner and reduce their overall credit burden. Once again, Citibank works directly with the customer to understand their overall debt and evaluates their cash flows to ensure that this personalised payment plan is affordable on a monthly basis throughout the tenor,” said Citibank business manager-cards Sandeep Bhalla.

He added that the bank cross-sells instalment loans to customers to meet their purchasing and payment needs through marketing efforts. “These are designed and delivered after having a conversation with the customer on his or her overall needs and ability to pay, based on monthly cash flows. This interaction determines the amount and tenor of the loan, such that a customer can manage the monthly payments to Citibank along with their other payment obligations. These promotions are offered through certain preferred vendors at points-of-purchase or upon request by customers post their purchase,” said Mr Bhalla.

Visa Signature - Free Airport Transit by Hertz

There is Good News for VISA Signature Card Holders. The next time you are flying on your business trip on Domestic Route or International route, just use your VISA Signature card to book the flight tickets on travelocity.co.in and get a FREE One-way Pick-Up and Drop By Hertz Rental car.Visa Signature is a Super-Premium card offered to High Level Executives or Businessman who fall under the HNI category [Who maintain a bank balance of at least Rs 10 mn].

In India, ICICI and HDFC offer Visa Signature Cards.

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