What Are the Various Safety Features of Your Credit Card?

credit card securityAll of us are worried about any fraudulent activity on our credit cards. Obviously, nobody wants to pay for what they have not spent. While there is need to exercise caution, there is no need for paranoia about credit card transactions. The credit cards come with various security measures. Additionally, the Reserve Bank of India has added security checks to prevent such frauds.

In this post, let’s look at various security measures used to prevent frauds in credit card transactions.

#1 Credit Card PIN

Useful for Point-of-Sale (POS) transactions. You need to enter your credit card PIN when you swipe your card at a merchant store. Credit card PIN is an important security feature. You must keep it confidential. Additionally, exercise extra care when you enter your card PIN on any machine.

The credit card PIN is not written anywhere on the card and thus adds an additional layer of security if you lose your credit card. Even if someone steals your credit card, he cannot swipe your credit card unless he knows your credit card PIN.

However, the stealer can still use for credit card for online purchases. How? Because Credit Card PIN is not needed for online purchases. How do we prevent frauds in online transactions? We will discuss in the next points.

#2 CVV (Card Verification Value)

Used for online purchase. This is a 3-digit number (4 digit in a few cases) printed on the back of your card. You must enter the CVV while making online purchases with your credit card. You must keep the CVV secure and not share the CVV with anyone. However, since both the credit card number and the CVV are printed on your credit card, anyone who has access to your credit even for a few seconds will get to know of these details.

#3 Card Expiry Date

This information is usually asked at the time of online purchase. However, like the CVV, the card expiry date is printed on your credit card and has the same loophole as the CVV.

#4 Two-Factor Authentication

Used for online transactions. First factor is the CVV. Second factor is the information that is not printed on your credit card. One-time password (OTP) over your email or phone is one such additional factor of authentication.

Therefore, for someone to dupe you, the fraudster not only needs your credit card details but also the access to your phone/e-mail. This adds an additional layer of security.

However, there is still a problem. Two-factor authentication (via OTP) does not work for international transactions. Just entering CVV is sufficient. This is where setting transaction limit can help.

#5 Setting Transaction Limits on Your Credit Card

This is very powerful way to prevent frauds and to limit the damage due to a fraud.

Your bank must now allow you to:

  • Block your card temporarily
  • Enable/disable all transactions
  • Lock/unlock various domestic or international transactions
  • Set up per transaction limit and daily limits for various kinds of transactions

There are 4 types of transactions.

  1. Point of sale (where you swipe your card)
  2. Online
  3. ATM cash withdrawal
  4. Contactless (NFC payment)

And these transactions could be domestic or international. Essentially 4 x 2 = 8 combinations.

You can now set enable/disable these 8 types of transactions. You can even set transaction limit for each kind of transaction. And all this can be done instantly from the mobile app/website.

For instance, if you are not planning to travel abroad or don’t foresee using your card on websites outside India, you can simply disable all international transactions.

OR you can set transaction limits. If you don’t think you will spend more than Rs 5,000 on an online transaction on a domestic website, you can enable online transactions but set the transaction limit to Rs 5,000. If, for some reason, you need to purchase an item worth Rs 10,000, you can log into the mobile app, increase the limit to Rs 10,000, carry out the transaction and reset the limit to Rs 5,000. Very quick and easy.

You can set daily limits also. For instance, if you set the transaction limit for domestic online transactions to Rs 5,000, there can still be multiple transactions of Rs 5,000 in a single day. To counter this, you can also set daily transaction limits too. So, if the transaction limit is Rs 5,000 and the daily limit is Rs 10,000, the fraudster can’t carry out more than 2 transactions of Rs 5,000 in a single day.

Note that fraudster won’t know what your limits are. When the transaction exceeds the limit, the bank rejects the transaction, and you get the SMS/e-mail about such transaction. Time to act.

So, setting up transaction limits does both: Preventing frauds and reducing the impact of fraud.

Do explore this feature in your mobile banking app.

Be Aware and Know Your Rights and Liabilities

Take precautions while using your credit card. Here are a few tips to avoid credit card frauds. However, frauds can still happen. Fraudsters will likely be ahead of you and me when it comes to technology. That’s why it is important to know your rights and liability in case you were to fall victim to a fraud.

Fortunately, RBI, through its circular dated July 6, 2017, limited the liability of victims of credit card frauds. And your liability depends on how soon you report the fraudulent activity to the bank. For instance, your liability is NIL if the fraud has happened due to negligence/deficiency on part of the bank or due to a third-party breach.

However, if the loss has happened because of your negligence, you are liable for any loss that happens until you report the unauthorized transaction to the bank. Any loss thereafter will be borne by the bank. Therefore, you must report such incidents fast.

And for you to report such activity quickly, you must first be aware of such activity.  Therefore, it is extremely important that you keep your mobile number and email updated with your bank. Check your messages/emails regularly. If you notice anything suspicious, report to the bank. For instance, not getting SMS for Point-of-sale purchases is a red flag.

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