The Reserve Bank of India (RBI) introduced some new norms for debit and credit cards earlier this year on January 15. The new rules came into force starting Monday, March 16, 2020, and are aimed at enhancing security and reducing frauds.
According to the new guidelines on the regulation of payment aggregators (PAs) and payment gateways (PGs), debit and credit cards will be used only for contact-based points of usage in India and the option of using the ATM PIN as a means of authentication for 'card not present' transactions shall no longer be available. This simply indicates that the new debit and credit cards can only be used for ATMs and point of sale (PoS) transactions within India.
The RBI has also requested the payment aggregators in the country to remove the option of using ATM PIN to complete online transactions and will be regulating the activities of all payment aggregators in the country. It has stated in its guidelines that based on the feedback received and taking into consideration the important functions of these intermediaries in the online payments space as also keeping in view their role vis-à-vis handling funds, they have decided to regulate in entirety the activities of all the payment aggregators.
According to the guidelines on the regulation of PAs and payment gateways (PGs), the already existing payment aggregators will need to achieve a net worth of Rs 15 crores by March 31, 2021, and a net worth of Rs 25 crores on or before March 31, 2023. RBI also said that the net-worth of Rs 25 crores shall be maintained at all times thereafter.
As per the new rule, the issuing debit or credit card authority will need to provide its users with a facility which will allow them to enable or initiate online transactions, international or overseas transactions, and contactless transactions. The facilities will only be enabled once the issuer activates them. This means that in order to use debit or credit cards for the above-mentioned transactions, holders will need to separately enable services.
Image credits: PTI