On Wednesday, the Reserve Bank of India (RBI) disallowed banks from issuing contactless credit and debit cards by default to its customers. The contactless facility, as well as international transaction accessibility, can now be activated at a user's will only.
The central bank said that at the time of issue or re-issue, physical or virtual cards should only be enabled for use only at contact based points of usage like ATMs and point of sale (PoS) devices within India.
With the extent of increase in card transactions in the country, RBI imposed the new restrictions to improve security and convenience of card users.
As for existing cards, its has allowed issuers to decide whether or not to disable the card not present (domestic and international) transactions, card present (international) transactions and contactless transaction rights, based on risk perception.
As for existing cards that have never been used to make online, international or in contactless transactions, the said facilities will be disabled compulsorily.
Issuers of cards will also have to provide the option to switch on or off and set or modify transaction limits on international, as well as, domestic access.
Further, such a change should be available round the clock through multiple channels - mobile application, internet banking, ATMs, Interactive Voice Response (IVR) and branches, RBI said. These rules are not mandatory for prepaid gift cards and those used at mass transit systems.