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Will new PIN protect your credit card online?

Last updated on: August 31, 2009 15:14 IST
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Want to buy movie tickets online? Looking to book train tickets online? Interested in gifting your sibling who lives abroad? If you are, then you must be aware that you require a credit card to pay for these transactions.

But now this is not enough. You also need another new PIN (personal identification number) to secure your transaction, as per the Reserve Bank of India's mandate that came in effect from August 1, 2009.

What made RBI take this step? How to use your card online safely? We attempt to answer these questions in this article.

Dark world of online frauds

Recently, the Cyber Crime Cell of Mumbai Police arrested one Ajay Patel for randomly using 50 ICICI Bank credit cards to book tickets of Kingfisher Airlines online. He changed the last 2 digits of the card number and used a new code in lieu of the PIN for that card.

His colleagues in Bangalore printed out the tickets and sold them to unsuspecting travellers at discounted rates. It was only when ICICI kept a close watch on the online credit for the purchases made at the Kingfisher site and saw a strange pattern in usage of a particular credit card user that the fraud came to light.

This particular user said he was totally unaware of the transaction, following which the bank lodged a complaint with the Cyber Crime Cell of Mumbai Police.

Similarly, a Citibank user found out that Rs 100,500 was transferred from his account to another account and he lodged the complaint. This is just one of the many instances of online fraud involving credit card.

Welcome to the new RBI mandate

It is with the aim of averting such type of frauds that RBI introduced a mandate making it mandatory to use pin for all credit card transactions conducted online.

As per the mandate, the new system for processing online transactions involves extra authentication or validation that uses the information not seen on the card.

If the credit card purchase is more than Rs 5,000 in a single transaction, the customer gets an online alert if the card is not present. Any failure to stick to these guidelines will attract fines as per the rules laid down under Payment and Settlement Systems Act 2007 (Act 51 of '07).

Will it help reduce fraud?

Though this move is in the right direction, it will not eliminate frauds completely. One reason is that not many users are aware of the dangers lurking on the Net.

This has been evident in the way in which they have given out their personal details online. They don't take steps to change their passwords frequently, and tend to give out their passwords to their friends and relatives. If the user's computer is infected with viruses, they can transmit password and PIN to outsiders. All these will still put the user's data at risk.

Safeguarding against online frauds:

Use these tips to protect yourself against online credit card frauds:

  • Always buy from reputed online vendors. Choose stores like ebay, rediff, indiatimes, et cetera over unknown ones.
  • Look out for the symbol of lock at the bottom of the page to indicate it is a secure site.
  • The Web site address must be https instead of http to denote a secure site.
  • Keep your card and PIN separately.
  • Check your statements regularly and bring any suspicious transactions to the notice of the bank immediately.
  • Don't disclose your PIN and password to others.
  • Keep your computer security updated as certain programs can trap the keys you press on your keyboard and transmit it to the hackers.
  • Use virtual digital keyboard seen on many secure sites to enter your PIN.

Credit card fraud is a growing crime today. It is essential to take security precautions to prevent yourself from falling victim to the fraudsters.

While RBI's move is really appreciable, a lot more needs to be done to safeguard the online transactions. The most important thing is card holder education. As the statement, 'Knowledge is power' is true here, educating the card users will help eliminate majority of the frauds.

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