CREDIT CARD NEWS
LATEST NEWS ON CREDIT AND DEBIT CARDS
CARD ISSUERS HAVE TO PROVIDE OPTION TO CHOOSE CARD NETWORK TO THE CUSTOMERS :
Dated 12.04.2024 : As per the notifications dated 06.03.2024 , RBI had asked the card issuers to not to enter into any arrangement or agreement with card networks that restrain them from availing the services of other card networks . Further Card issuers were asked to provide an option to their eligible customers to choose from multiple card networks at the time of issue. For existing cardholders, this option would be provided at the time of the next renewal. .
The Authorised card networks in India are 1) American Express Banking Corp., 2) Diners Club International Ltd., 3 ) MasterCard Asia/ Pacific Pte. Ltd., 4 ) National Payments Corporation of India–Rupay, and 5 ) Visa Worldwide Pte. Limited.
The above directions shall not be applicable to credit card issuers with number of active cards issued by them being 10 lakh or less in number.
Further Card issuers who issue credit cards on their own authorised card network are excluded from the applicability of this circular.
To read RBI Notification dated 06.03.2024 , CLICK HERE
HOW TO CHOOSE A CREDIT CARD ? CLICK HERE
e-Mandates for recurring online transactions –
Enhancement of limit for specified categories
Dated 09.12.2023 : Presently , payments can be made on e-mandates on your cards for recurring transactions without OTP for limit up to Rs 15,000 .
However now RBI has proposed to increase the said limit of Rs 15,000 to exempt the requirement of additional factor like OTP for transactions up to ₹1 lakh for subscription to mutual funds, payment of insurance premium and payments of credit card bills.
The framework for processing of e-mandates for recurring transactions was first introduced by Reserve Bank of India in August 2019 . The limits for execution of e-mandates without Additional Factor of Authentication (AFA) currently stands at ₹15,000/- (last updated in June 2022).
Though the system has stabilised, RBI now finds a need to enhance the limit in categories such as subscription to mutual funds, payment of insurance premium and credit card bill payments, where the transaction sizes are more than ₹15,000. It is, therefore, proposed by RBI to exempt the requirement of AFA like OTP for transactions up to ₹1 lakh for the following categories, viz., subscription to mutual funds, payment of insurance premium and payments of credit card bills. The other existing requirements such as pre- and post-transaction notifications, opt-out facility for user, etc. shall continue to apply to these transactions. The revised circular will be issued shortly by the RBI .
CVV-LESS PAYMENTS ON TOKENIZED RUPAY CARDS
Dated 16.05.2023 : You will not be required now to feed 3 digit CVV numbers on a Rupay card on-line payment , if you have already tokenized the card on the website .
RuPay has now introduced the CVV (Card Verification Value) free payment experience for its Debit, Credit & Prepaid cardholders who have tokenized their cards on the merchant application or webpage. Tokenization is a simple technology to secure card transactions without sharing the clear or real card details with the merchants.
When a cardholder opts to save their card for a domestic ecommerce transaction, they authenticate the transaction through the card details (Card number, CVV, Card expiry date) as a onetime activity followed by entering the OTP (two-factor authentication), the details are then Tokenized and saved with the merchant. This safeguards the card details of the customer from cyber frauds as real details are not saved with the merchant. On the merchants live for CVV less payments, for the subsequent transactions customer can complete the payment by just entering the OTP without the need to enter the CVV or other card details again. With the auto read OTP feature enabled on customer’s devices, this payment experience becomes smoother than ever. This feature has been made live along with RazorPay for merchants like Rapido, Porter, etc. RuPay is further working with major aggregators/gateways like PayU, CyberSource, Firstdata, Paytm, etc. to extend this feature to other merchants.
This new CVV less experience ensures that the cardholder will not have to reach out to their wallet or remember any card details, if they have saved (tokenized) their card on the ecommerce merchant which supports this feature. They will just have to enter the OTP or their device will auto populate the OTP during the domestic ecommerce transaction and the payment will be done!
Rupay cards are the products of National Payment Corporation of India
To read NPCI Press release on the subject , CLICK HERE
YOUR CARD DATA IS NO MORE ON MERCHANT WEBSITES :
You may permit Tokenization of your card for Your recurring transactions
Dated 02.10.2022 : In March 2020 . Reserve Bank of India ( RBI ) had issued notification prohibiting storage of card data by non-banks and and merchants from June 30, 2021. The time limit was extended up to 30.09.2022 . Hence now your card data can no more be stored by non-banks and merchants . This may affect your earlier payment instructions on your cards like Electricity bill , insurance premium etc .
Now the merchant sites may ask you to tokenize your card on their websites . A tokenised card transaction is considered safer as the actual card details are not shared with the merchant during transaction processing. You may chose card of your choice for tokenization at a particular merchant site . On your request , Bank / credit card issuer will send OTP on your registered mobile for the purpose . On submitting OTP , the merchant will tokenize your card and they will be allowed to do recurring transactions as per your standing instructions.
Tokenisation of card is not mandatory for a customer and a customer can choose whether or not to let his / her card tokenised.
Before making payment , now merchant will send an advanced notice to the credit card issuer about the intended payment . In turn , the credit card issuer will send a message about the upcoming transaction . If you do not want to make the payment , you may go to the website of credit card issuer and cancel the transaction immediately .
To know what is TOKENIZATION , CLICK HERE
REWARD POINTS / MILEAGE POINTS ON CARDS NOT VDA : CBDT
Dated 02.07. 2022 : TDS at 1 % will be charged on Cryptocurrency transactions / Virtual Digital Assets ( VDA ) from 1st, July 2022 .
However the following digital assets connected with credit cards / debits cards are exempted from the definition of virtual digital asset by the Income tax department
(i) Gift card or vouchers, being a record that may be used to obtain goods or services or a discount on goods or services;
(ii) Mileage points, reward points or loyalty card, being a record given without direct monetary
consideration under an award, reward, benefit, loyalty, incentive, rebate or promotional program that may be used or redeemed only to obtain goods or services or a discount on goods or services;
(iii) Subscription to websites or platforms or application
Hence TDS need not be collected on such transactions
To read original notifications ,
Check CBDT Notification dated 30.06.2022 and Dated 28.06.2022
RBI'S NEW INITIATIVES ON CREDIT AND DEBIT CARDS
Dated 08.06.2022 : Reserve Bank of India ( RBI ) has announced two policy decisions on usage of cards :
1. E-Mandates on Cards for Recurring Payments – Enhancement of Limit
RBI will permit e-mandates for recurring payments up to Rs 15,000 per transaction .
Bank customers now can issue e-mandate based recurring payments with an Additional Factor of Authentication (AFA) during registration Banks have to send a pre-debit notification . Customers find such payments are convenient for their recurring payments . Major banks are providing the facility and the transaction volumes are seeing good traction. Till date, over 6.25 crore mandates have been registered under this framework, including for over 3,400 international merchants. Such payments facilitate payments of larger value like subscriptions, insurance premia, education fee, etc. Now RBI has proposed to enhance the limit from ₹5,000 to ₹15,000 per recurring payment. Necessary instructions will be issued shortly by RBI .
2. . Linking of RuPay Credit Cards with Unified Payments Interface (UPI)
UPI has become the most inclusive mode of payment in India. Currently, over 26 crore unique users and 5 crore merchants are onboarded on the UPI platform. In May 2022 alone, 594.63 crore transactions amounting to ₹10.40 lakh crore were processed through UPI. UPI currently facilitates transactions by linking Savings / Current Accounts through Debit Cards of users. The interoperability of PPIs has also facilitated access of PPIs to the UPI payment system for undertaking transactions. In order to further deepen the reach and usage, RBI has proposed to allow linking of credit cards to UPI. To start with Rupay credit cards will be enabled with this facility. This arrangement is expected to provide more avenues and convenience to the customers in making payments through UPI platform. This facility would be available after the required system development is complete. Necessary instructions will be issued by RBI to NPCI separately.
( Extracted from RBI'S Statement on Developmental and Regulatory Policies dated 08.06.2022 )
RBI prohibits issue of unsolicited Credit Cards / upgradation :
RBI'S MASTER DIRECTIONS ON ISSUE OF CREDIT AND DEBIT CARDS
Dated 23.04.2022 : Reserve Bank of India ( RBI ) has revised its Master Direction on Issue of credit / debit cards and issued a fresh set of guidelines on 21.04.2022 .
According to the circular issued by RBI , Scheduled banks , other than RRBs , Scheduled Urban co-operative banks and NBFCs with a minimum net worth of Rs 100 crores can issue credit cards subject to various terms & conditions .
Credit cards are to be issued on the basis of application made by the customers . Credit cards issued have to be activated based on customer's acceptance through OTP ( One time Password ) . Any issue of unsolicited cards/upgradation is strictly prohibited .
In case, an unsolicited card is issued/existing card upgraded and activated without the explicit consent of the recipient and the latter is billed for the same, the card-issuer shall not only reverse the charges forthwith, but also pay a penalty without demur to the recipient amounting to twice the value of the charges reversed. In addition, the person in whose name the card is issued can also approach the RBI Ombudsman who would determine the amount of compensation payable by the card-issuer to the recipient of the unsolicited card as per the provisions of the Ombudsman Scheme, i.e., for loss of complainant’s time, expenses incurred, harassment and mental anguish suffered by him/her.
Card-issuers shall seek One Time Password (OTP) based consent from the cardholder for activating a credit card . If the same has not been activated by the customer for more than 30 days from the date of issuance and if no consent is received for activating the card, card-issuers shall close the credit card account without any cost to the customer within seven working days from date of seeking confirmation from the customer. In case of a renewed or replaced card, the closure of an inactivated card shall be subject to payment of all dues by the cardholder.
No card-issuer shall report any credit information relating to a new credit card account to Credit Information Companies prior to activation of the card. Any credit information relating to such inactivated credit cards already reported to Credit Information Companies shall be withdrawn immediately; under no circumstances it shall take more than 30 days from the effective date of these directions.
Card-issuers shall ensure that the telemarketers they engage, comply with directions/regulations on the subject issued by the Telecom Regulatory Authority of India (TRAI) from time to time while adhering to guidelines issued on “Unsolicited Commercial Communications – National Customer Preference Register (NCPR)”. The card-issuer’s representatives shall contact the customers only
between 10:00 hrs and 19:00 hrs.
RBI has asked Card-issuers to ensure that there is no delay in sending/dispatching/emailing bills/statements and the customer has sufficient number of days (at least one fortnight) for making payment before the interest starts getting charged. In order to obviate frequent complaints of delayed billing, the card-issuer may consider providing bills and statements of accounts through internet/mobile banking with the explicit consent of the cardholder. Card-issuers shall put in place a mechanism to ensure that the cardholder is in receipt of the billing statement.
RBI has pointed out about the instances where unsolicited/applied-for cards have been misused before reaching the persons in whose names these have been issued. So RBI has emphasised that any loss arising out of misuse of such unsolicited cards shall be the responsibility of the card-issuer only and the person in whose name the card has been issued shall not be held responsible for the same.
RBI has also issued caution to credit card issuers with regard to customers holding several credit cards . As holding several credit cards enhances the total credit available to any consumer, card-issuers shall assess the credit limit for a credit card customer taking into consideration all the limits enjoyed by the cardholder from other entities on the basis of self-declaration/credit information obtained from a Credit Information Company, as appropriate. This shall be uniformly applied as per the board approved policy of the card-issuer.
The detailed master circular contains guidelines on issue , closure ,billing , levy of charges and penalty and other connected maters and you may go through the circular by clicking here