Rules related to debit and credit cards will change from October 1, RBI issued deadline

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Rules related to debit and credit cards

New Delhi: There is important information for people using credit cards and debit cards. From October 1, the Reserve Bank of India’s card-on-file tokenization (CoF Card Tokenization) rule is going to change. The Reserve Bank of India says that after the change in the tokenization system, the payment experience of cardholders will improve, and debit card and credit card transactions will be more secure than before.

According to RBI, the purpose of these new rules is to make payments through credit and debit cards more secure than before. When the customer transacts online, point of sale (POS), or app through debit or credit card, all the details will be saved in the encrypted code.

What is this tokenization system?
Under the new arrangement, the Reserve Bank has prohibited payment companies from storing the data of customers’ credit cards or debit cards. Payment companies will now have to provide an alternate code in lieu of the card, which is named Token. These tokens will be unique and the same token will work for multiple cards. Once this is implemented, for online payment, instead of using the card directly, a unique token will have to be used.

Rules related to debit and credit cards

According to this new rule of RBI, without taking approval from the customer, his credit limit cannot be increased. Also if no payment has been made then charges or taxes etc. cannot be capitalized while adding interest.

Token system will reduce fraud cases: RBI
The Reserve Bank says that with the implementation of the system of payment with tokens in lieu of cards, the cases of fraud will be reduced. At present, the risk of fraud among customers increases due to the leaking of credit card or debit card information. The new system is expected to reduce such cases of fraud.

The Reserve Bank says that at present, e-commerce websites, merchant stores, apps, etc. store the card details after the customers make payments with debit cards and credit cards. In many cases, merchants are left with no option but to store the card details before the customers. If these details are leaked, there is a possibility of loss to the customers. According to the Reserve Bank, these dangers will be reduced with the new rule.

Will not be able to give information to co-brands
In the new provisions of RBI, it has been said that the information related to the transactions done through the card cannot be given to the branding partner. These provisions may affect the business model of companies operating in the co-branded card segment, as these companies entice customers with various offers based on these transactions.

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