Card Transactions – FAQ

1. What are various types of cards?

Ans: Cards can be classified on the basis of their issuance, usage and payment by the card holder. There are three types of cards (a) debit cards (b) credit cards and (c) prepaid cards.

2. Who issues these cards?

Ans: Debit cards are issued by banks and are linked to a bank account. Credit cards are generally issued by banks but can also be issued by other approved entities. Prepaid cards are issued by banks / non-banks against the value paid in advance by the cardholder and stored in such cards which can be issued in the form of cards or wallets.

3. What are the usages of debit cards?

Ans: The debit cards can be used to withdraw cash from an ATM, purchase of goods and services at points of sale (POS) terminals or e-commerce (online purchase). While they can be used domestically, the international usage is also allowed if requested by the holder of the card. They can also be used for domestic fund transfer from one person to another.\

4. What are the usages of credit cards?

Ans: The credit cards can be used for purchase of goods and services at POS terminals / e-commerce (online purchase) / through Interactive Voice Response (IVR) / Mail Order Telephone Order (MOTO), etc. These cards can be used domestically and internationally (provided they are enabled for international use). The credit cards can also be used to withdraw cash from an ATM and for transferring funds to bank accounts, debit cards, credit cards and prepaid cards within the country.

5. What are the usages of prepaid cards?

Ans: The usage of prepaid cards depends on who is the issuer of such cards. Prepaid cards can be open or semi-closed in nature. Open system prepaid cards are issued by banks can be used to withdraw cash from an ATM, purchase of goods and services at POS terminals / e-commerce (online purchase) and for domestic fund transfer from one person to another. Semi-closed system prepaid cards can be issued by authorised bank and non-bank entities and used for purchase of goods and services at POS terminals / e-commerce (online purchase) and for domestic fund transfer from one person to another.

FAQs on Prepaid Payment Instruments (PPIs) give further detailed information on PPIs.

6. What are various methods of using a card at a POS terminal?

Ans: A card can be swiped (Magnetic-Stripe card), dipped (Chip based card) or tapped (Contactless Near Field Communication {NFC} Card) at a POS terminal.

7. What are Magnetic Stripe cards, EMV Chip & PIN cards and Contactless NFC cards?

Ans: The Magnetic Stripe cards stores card data on magnetic stripe present on the card while the data in EMV Chip & PIN cards is stored in a chip. PIN is required as an additional input for cardholder verification in EMV Chip & PIN cards. In a Contactless NFC card, the card is read by keeping the card near the card reader. The EMV Chip & PIN cards and Contactless NFC cards are considered to be safer when compared to Magnetic Stripe cards.

8. What are Card Present (CP) and Card Not Present (CNP) transactions?

Ans: A CP transaction is a card transaction that is carried out through physical presence of card at the point of transaction. It is also known as face-to-face or a proximity payment transaction. An example is a transaction carried out at an ATM or a POS terminal. A CNP transaction does not require the card to be physically presented at the point of transaction. It is also called as a remote transaction. An example is an online transaction or a mobile banking transaction using the card.

9. Who decides the limits for cash withdrawal or purchase of goods and services through a card?

Ans: The limits on cash withdrawal at ATMs and for purchase of goods and services are decided by the issuer banks. Cash withdrawal using debit cards at POS terminals has also been enabled by certain banks wherein, a maximum of Rs.2000/- can be withdrawn daily.

10. Is there anyway a customer can come to know quickly whether a fraudulent transaction has taken place using his / her card?

Ans: RBI has been taking various steps to ensure that the card payment environment is safe and secure. RBI has mandated banks to send online alerts for all card transactions so that a card holder is aware of transactions taking place on his / her card. In order to benefit from it, the cardholders are advised to register for SMS / e-mail alerts.

11. How are the transactions carried out through cards protected against fraudulent usage?

Ans: For carrying out any transaction at an ATM using debit / credit / prepaid cards, the card holder has to key in the PIN which is known only to him / her. For carrying out transactions using a debit card at POS terminals too, the card holder has to key-in the PIN which is known only to him / her. In the case of credit card usage at POS terminals the requirement of PIN depends on the issuing bank’s policy on security and risk mitigation. Also, in case of prepaid card usage at POS terminals, there is a requirement of Additional Factor of Authentication (AFA). In the case of e-commerce transactions, the AFA is applicable except in case of international websites.

12. What are the liabilities of a bank in case of fraudulent use of a card by an unauthorised person?

Ans: In case of CNP transactions RBI has mandated providing AFA for domestic transactions. If a transaction has taken place without AFA and the customer has complained that the transaction is not effected by him / her, the issuer bank shall reimburse the loss to the customer without demur. Further, liability of a customer in an unauthorised electronic banking transaction through a bank has been covered in RBI circular DBR.No.Leg.BC.78/09.07.005/2017-18 dated July 6, 2017 on ‘Customer Protection – Limiting Liability of Customers in Unauthorised Electronic Banking Transactions’.

13. What is the mandate for banks for issuing Magnetic Stripe cards or EMV Chip & PIN cards?

Ans: RBI has mandated that banks may issue new debit and credit cards only for domestic usage unless international use is specifically sought by the customer. Such cards enabling international usage will have to be essentially EMV Chip & PIN enabled. The banks have also been instructed to convert all existing Magnetic Stripe cards to EMV Chip & PIN cards before December 31, 2018.

Source RBI.ORG.IN

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