By Priyamvada Jain
With rapid advancement in technology, variety of new means has emerged by which we can pay for the goods we buy. Plastic money has replaced the traditional system, wherein one had to have rupee notes to purchase goods from the market. A credit card is a payment card issued to users as a system of payment. It allows the cardholder to pay for goods and services based on the holder’s promise to pay for them. Credit cards are accepted worldwide, and are available with a large variety of credit limits, repayment arrangement, and other perks such as insurance protection, rewards schemes in which points earned by purchasing goods with the card can be redeemed for further goods and services or cash back.
With the rapid growth of Indian economy and advancement in technology credit cards have become very common. But these cards have brought problems of their own. Skimming and phishing comes as a part of the deal. Skimming is the illegal copying of information from the magnetic strip of a credit card. Phishing refers to emails or SMSes that trick people into giving out their personal and banking information. SMSes that promise lotteries and jackpots are sent which can be received by giving the personal account details. Recently it has come to light that a global syndicate has been skimming Indian credit card users for the last 2 months. Several cases have been reported where people’s credit card bills and registered mobile numbers have shown fraudulent and unauthorized transactions. It is believed that the total unauthorized transactions so far amount to more than Rs. 30 crores. Bankers believe that the stolen credit card information has been gathered via compromised retail outlets and stores. Such stores possess card swiping machines which can be skimmed by hackers to reveal the details of all cards that are swiped through them. Once the card information has been gained, it can be utilized to carry out fraudulent online transactions or the card itself can even be physically cloned.
A more practical solution has been developed by the government to tackle this problem. The government plans to introduce chip-based credit cards which will pack extra security measures. While such cards have been around for a while, they have been flaunted mostly by high risk, high net worth individuals. Soon, everybody can own at least one since the Reserve Bank of India has asked banks to replace the existing magnetic stripe credit and debit cards with the more secure chip-based cards by 30 November 2013. The most visible difference in these cards is the small chip, not unlike a SIM, that is embedded in the front. Unlike regular cards with the magnetic strip at the back, chip cards do not have to be swiped at the point-of sale terminals. Instead, they have to be dipped into the device and the cardholder will be required to key in a unique PIN to complete the transaction, which will enhance the security level.
All leading banks like SBI, HDFC, Axis Bank have already rolled out the chip cards in some categories. Most banks are not charging an additional fee to upgrade to the smarter chip-based system. However, there may be exceptions. Since chip cards are more expensive than magnetic strip cards, some banks may levy a nominal fee.
In my personal view the government and the RBI can resort to other means also to solve the menace. They can implement rules which enforce banks to allow the customers to complete their transactions without entering the card details. Credit Card Company American Express launched a service ‘ezeClick’ which enabled its customers to complete online transactions without entering card details, thereby simplifying the transaction process with just a single user ID. The government should ban all the sites which are used for phishing. These sites are the main source of the frauds. Majority of the frauds are carried out through these sites. So all these sites should be searched for and should be banned. It should also be made mandatory for all banks to SMS details of a credit card transaction to the user’s mobile number instantly.
Though, hopefully with the instalment of the chip based credit card system the problem of the fraudulent and unauthorized transactions will reduce and people would be able to use credit cards without any restriction and anguish.
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