3/1/2015

BankersAdda:AllaboutaBANKCARD

ABankCardistypicallyaplasticcardissuedbyabanktoitsclientsthatperformsoneormoreofanumberof
servicesthatrelatetogivingtheclientaccesstofunds,eitherfromtheclient'sownbankaccount,orthrougha
creditaccount.
Cards can be classified on the basis of their issuance, usage and
paymentbythecardholder.Therearethreetypesofcards
DebitCards
CreditCards
PrepaidCards
Debitcards
Debitcardsareissuedbybanksandarelinkedtoabankaccount.
The debit cards are used to withdraw cash from an ATM, purchase of goods and services at Point of Sale
(POS)/Ecommerce(onlinepurchase)bothdomesticallyandinternationally(provideditisenabledforinternational
use).However,itcanbeusedonlyfordomesticfundtransferfromonepersontoanother.
CreditCards
Creditcardsareissuedbybanks/otherentitiesapprovedbyRBI.Thecreditlimitssanctionedtoacardholderis
intheformofarevolvinglineofcredit(similartoaloansanctionedbytheissuer)andmayormaynotbelinked
toabankaccount.
The credit cards are used for purchase of goods and services at Point of Sale (POS) and Ecommerce (online
purchase)/ through Interactive Voice Response (IVR)/Recurring transactions/ Mail Order Telephone Order
(MOTO).Thesecardscanbeuseddomesticallyandinternationally(provideditisenabledforinternationaluse).
ThecreditcardscanbeusedtowithdrawcashfromanATMandfortransferringfundstobankaccounts,debit
cards,creditcardsandprepaidcardswithinthecountry.
PrepaidCards
Prepaid cards are issued by the banks / nonbanks against the value paid in advance by the cardholder and
storedinsuchcardswhichcanbeissuedassmartcardsorchipcards,magneticstripecards,internetaccounts,
internetwallets,mobileaccounts,mobilewallets,papervouchers,etc.
Theusageofprepaidcardsdependsonwhohasissuedthesecards.Theprepaidcardsissuedbythebankscan
be used to withdraw cash from an ATM, purchase of goods and services at Point of Sale (POS)/Ecommerce
(online purchase) and for domestic fund transfer from one person to another. Such prepaid cards are known as
opensystemprepaidcards.However,theprepaidcardsissuedbyauthorisednonbankentitiescanbeusedonly
forpurchaseofgoodsandservicesatPointofSale(POS)/Ecommerce(onlinepurchase)andfordomesticfund
transferfromonepersontoanother.Suchprepaidcardsareknownassemiclosedsystemprepaidcards.These
cardscanbeusedonlydomestically.
Themaximumvaluethatcanbestoredinanyprepaidcard(issuedbybanksandauthorisednonbankentities)at
anypointoftimeisRs1,00,000/
ThefollowingtypesofsemiclosedprepaidpaymentinstrumentscanbeissuedbycarryingoutCustomerDue
Diligenceasdetailedbythebanksandauthorisednonbankentities:
UptoRs.10,000/byacceptingminimumdetailsofthecustomerprovidedtheamountoutstandingat
anypointoftimedoesnotexceedRs10,000/andthetotalvalueofreloadsduringanygivenmonth
alsodoesnotexceedRs10,000/.Thesecanbeissuedonlyinelectronicform.
fromRs.10,001/toRs.50,000/byacceptinganyofficiallyvaliddocumentdefinedunderRule2(d)
ofthePMLRules2005,asamendedfromtimetotime.SuchPPIscanbeissuedonlyinelectronic
formandshouldbenonreloadableinnature
uptoRs.50,000/withfullKYCandcanbereloadableinnature.ThebalanceinthePPIshouldnot
exceedRs.50,000/atanypointoftime.

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BankersAdda:AllaboutaBANKCARD

SomethingmoretoaBankCard.....
Whodecidesthelimitsoncashwithdrawalorpurchaseofgoodsandservicesthroughuseofa
card?
ThelimitsoncashwithdrawalatATMsandforpurchaseofgoodsandservicesaredecidedbytheissuerbank.
However,incaseofcashwithdrawalatotherbanksATM,thereisalimitofRs10,000/pertransaction.Cash
withdrawalatPOShasalsobeenenabledbycertainbankswherein,amaximumofRs.1000/canbewithdrawn
dailybyusingdebitcards.
Isthecustomerchargedbyhis/herbankwhenheuseshisdebitcardatotherbanksATMfor
withdrawingcash?
Thesavingsbankaccountcustomerwillnotbechargedbyhis/herbankuptofivetransactions(inclusiveofboth
financialandnonfinancialtransactions)inamonthifhe/sheusesanATMofanotherbank.However,withinthis
overalllimitoffivefreetransactions,fortransactionsdoneatATMofanotherbanklocatedinthesixmetro
centres,viz.Mumbai,NewDelhi,Chennai,Kolkata,BengaluruandHyderabad,thefreetransactionlimitissetto
threetransactionspermonth.
WhereshouldthecustomerlodgeacomplaintintheeventofafailedATMtransaction(account
debitedbutcashnotdispensedattheATM)?
The customer has to approach his/her bank (bank that issued the card) to lodge a complaint in the event of a
failedATMtransaction.
WhatisthetimelimitforresolutionofthecomplaintpertainingtofailedATMtransaction?
Thetimelimit,forresolutionofcustomercomplaintsbytheissuingbanks,iswithin7workingdaysfromthedate
of receipt of customer complaint. Hence the bank is supposed to recredit the customers account within 7
working days. For failure to recredit the customers account within 7 working days of receipt of the complaint
fromthecustomer,thebankisliabletopayRs100perdayascompensationtothecustomer.
Whatistheoptionforacardholderifhiscomplaintisnotredressedbytheissuer?
If a complainant does not get satisfactory response from his/her bank within a maximum period of thirty (30)
daysfromthedateofhislodgingthecomplaint,he/shewillhavetheoptiontoapproachtheOfficeoftheBanking
Ombudsman(inappropriatejurisdiction)forredressalofhisgrievance.
Howarethetransactionscarriedoutthroughcardsprotectedagainstfraudulentusage?
For carrying out any transactions at an ATM, the card holder has to key in the PIN which is known only to
him/herfordebit/creditandprepaidcards.However,forcarryingouttransactionsatPOStoo,thecardholderhas
tokeyinthePINwhichisknownonlytothecardholderifadebitcardisused.Inthecaseofcreditcardusage
at POS the requirement of PIN depends on the banks policy on security and risk mitigation. In the case of e
commercetransactions,additionalfactorofauthenticationisapplicableexceptincaseofinternationalwebsites.
Whataretheliabilitiesofabankincaseoffraudulentuseofacardbyunauthorisedperson?
In case of card not present transactions RBI has mandated providing additional factor of authentication (if the
issuer bank and ecommerce merchant bank is in India). Hence, if a transaction has taken place without the
additional factor of authentication and the customer has complained that the transaction is not effected by
her/him,thentheissuerbankshallreimbursethelosstothecustomerwithoutdemur.
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BankersAdda:AllaboutaBANKCARD

Isthereanywayacustomercancometoknowquicklywhetherafraudulenttransactionhas
takenplaceusinghis/hercard?
RBI has been taking various steps to ensure that card payment environment is safe and secure. RBI has
mandated banks to send online alerts for all card transactions so that a card holder is aware of transactions
takingplaceonhis/hercard.
WhatisthemandateforbanksforissuingMagneticstripecardsorChipbasedcards?
RBIhasmandatedthatbanksmayissuenewdebitandcreditcardsonlyfordomesticusageunlessinternational
use is specifically sought by the customer. Such cards enabling international usage will have to be essentially
EMVChipandPinenabled.ThebankshavealsobeeninstructedtoconvertallexistingMagstripecardstoEMV
Chip card for all customers who have used their cards internationally at least once (for/through e
commerce/ATM/POS).

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