New Debit and Credit card rules from 1 July 2022

The Reserve Bank of India (RBI) has set new rules for debit and credit cards which will be in effect from July 1. The regulations will help increase the security of card transactions. 

According to the new rule, online merchants will not be able to store customers’ data on their systems. The new rules implement card-on-file tokens for domestic online purchases. The current cards in use will be tokenized. This will help increase the security of online transactions. From July 1 merchant will have to delete customers’ debit and credit card details from their system.

The new changes are not mandatory, the card will not be tokenized without customers’ consent. If the customer doesn’t want to tokenize his/her card they will have to enter all their details manually every time. On the other hand, if the card is tokenized the customer will only have to enter Card Verification Value (CVV) and One Time Password (OTP). This will be brought into action as an Additional Factor Authentication (AFA). It will apply only to domestic online transactions. Earlier the deadline for card tokenization was January 2022 but was extended by six months and will be in action from 1 July 2022. 

How does it work?

Tokenization is a replacement of actual information with a combination of codes of your details. 

• Initially, we had to enter all our card details like card number, name, and expiry date. With the new system, this data will remain with you. 
• You will get a code instead which will be unique and confidential. In this way, you will not have to disclose your card details, especially your card number.
• Your token will be encrypted by your bank. 
• Every time you have to make a transaction, you will enter the tokenized code provided to you by the card issuer. Your card number will not be disclosed anywhere, only the last 4 digits will be displayed for your confirmation. 

This way of payment ensures the total security of your valuable data and makes the procedure easy. Previously, your card details could be saved on the system but with the new system, you cannot save your card details. This is very important for payment security. This measure was taken by the RBI to reduce online payment fraud. 

A single card will have a unique code provided by the merchant. 

Credit Cards

RBI has extended the credit card confirmation deadline to 1 October 2022. Earlier, the deadline was 1 July but was extended by three months. This includes credit card activation and increasing card limits. 

The extension allows the card issuers to get the customer’s consent via One Time Password if the credit card is not activated by the customer for more than 30 days after issue. If the consent is not received, the issuer is free to close the account without any charges in the next 7 business days. 

This decision will help issuers reduce spam usage of cards for various purposes. Another provision whose deadline is extended is the extension of the credit card limit. The customers have to ensure the credit card limit in advance and strictly adhere to that. Transactions above the card limit will not be processed without explicit consent. 

These are the new regulations for debit and credit card transactions. These are important considering the cardholder’s safety. With the new guidelines and successful implementation, transactions will be safer and better. Tokenization is optional but if done it will be beneficial. It will be performed by the card issuing company only on request. 1 July onwards, card details won’t be saved on any servers ensuring customer safety.