A panel within the Reserve Bank of India formed in April has released recommendations for fighting ATM, POS and online fraud.
In its report published Jan. 21, the “Working Group on Information Security, Electronic Banking, Technology Risk Management and Tackling Cyber Fraud” calls on the central bank to mandate the transition of magnetic stripe cards to EMV CHIP-and-PIN cards.
Chip-based cards house data on microchips instead of magnetic stripes, making the card data more difficult to steal and cards more difficult to reproduce, the report notes. The panel also suggests that the central bank require that ATMs and payment terminals be upgraded to accommodate acceptance of smart cards requiring PINs and that mag-stripe devices be phased out.
A spokesperson for Mumbai-based State Bank of India expressed surprise by the recommendation.
“That will be a big shift in the Indian banking system,” the spokesperson says. “It will be interesting to see how all the stakeholders react because it obviously means a lot in terms of costs to the banks at least."
The working group also recommended that central bank assist in the creation of a separate unit bank fraud in police departments to handle online-fraud cases where jurisdiction is unclear or ambiguity exists on where victims should file police complaints.
For ATM fraud occurring in a shared network, when the card of one bank is used to perpetrate fraud through another bank’s ATM, the bank acquiring the transaction would be responsible for reporting the fraud and soliciting the help of the issuing bank to recover the money, the group recommends.
The central bank plans to consider the recommendations and will establish any rules changes after an internal review process, a spokesperson tells PaymentsSource.
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