The Reserve Bank of India has released a final roadmap and a fixed timeline for banks to ensure the systems they use to process card transactions are secure.
The central bank has been working over the last two years to come up with new norms to make card present transactions more safe and secure after an increasing number of fraud cases.
In a notification to all banks in India, the central bank said that it had reviewed a working group’s recommendations on securing payment systems in India and the feedback from the industry on those recommendations to come up with additional measures and requirements to make payment systems more secure. The bank issued the roadmap Sept. 22.
Point-of-sale card transactions in India support only signature authentication (PINs are not yet supported), and most cards issued by banks are magnetic stripe cards that are vulnerable to skimming and cloning, the central bank acknowledged.
As such, the bank said that it was going to accept the working group’s recommendations, which include use of Aadhaar-based biometric authentication for all card present transactions in lieu of PIN entry with mag-stripe cards (
The central bank will review the use of Aadhaar-based biometric authentication as a second factor of authentication for card-present transactions by December 2012, the central bank said in the notification.
The bank will then assess the need for a complete switch to EMV chip-and-PIN technology for card-based transactions as recommended by the working group (
The central bank, however, clarified that banks are free to migrate to EMV based on their commercial judgment and decisions taken by their boards.
Under the notification, the central bank asked all banks to implement improved fraud risk-management practices and strengthen merchant sourcing and monitoring processes by Sept. 30, 2012.
The central bank also noted that commercial readiness of the acquiring infrastructure to support EMV for purchase transactions would also have to be achieved by June 30, 2013.
As of that date, issuers also must be ready to issue EMV cards, while all payment terminals in India will have to accept chip-based debit card transactions with PINs.
The central bank also ordered that by June 30, 2013 EMV cards would have to be issued to customers that have seen at least one case of a fraudulent purchase using their debit or credit card in a foreign location.
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