All merchant acquirers and card issuers in India would have to establish adequate risk-management systems and processes to help prevent card fraud within the next 12 months under proposals outlined in a central bank working group report released June 2.
The Reserve Bank of India formed the Working Group for Securing Card Present Transactions comprised of officials from banks and card companies on March 31 to create a plan to increase the security of in-store purchases.
The recommendations published in the report are open to public comment until June 30, after which the central bank will publish its final guidelines.
According to the working group’s recommendations, the acquiring infrastructure would also have to be commercially ready to accept EMV chip-and PIN cards for payment within the next two years. Card issuers also would have to ensure their readiness to support EMV payments within the same timeframe.
Moreover, the group recommended that all debit and credit card transactions should require a PIN as an additional form of authentication at the point of sale within the next two years.
More than 99% of the cards issued in India are magnetic stripe cards, though a few banks, such as Citibank India Pvt. Ltd. and ICICI Bank Ltd., issue EMV cards to customers who often travel overseas or who have high credit limits. However, the cards are chip-and-signature versions, and none of the banks has moved to issue chip-and-PIN cards, according to the report.
The group, however, indicated that the POS infrastructure might require few changes to comply with its recommendations because approximately 90% of the country’s existing terminals are able to accept EMV chip cards.
However, half of India’s ATMs are not and would require simple hardware and software upgrades, while the rest may require a major hardware upgrade or total replacement, according to the group.
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