The working group set up by the Reserve Bank of India (RBI) has recommended steps to make card transactions safer. However, this may take two years for banks to implement.
To start with, banks would have to strengthen their existing payment infrastructure by securing technology, improving fraud risk management practices across all stakeholders and strengthening the merchant sourcing process.
The panel suggested banks should shift to chip-based cards from ones with magnetic strips, which are currently in practice. Using chip-based cards, along with a PIN, would bring down the number of frauds. The committee also suggested recommended the use of Aadhaar biometric cards as an additional authentication factor. However, for this, banks would have to upgrade automated teller machines and point-of-sales terminals to accept the biometric cards.
The committee said fraud levels on international transactions are significantly higher, compared to domestic transactions. The committee also said chip cards and PINs should be issued when there was evidence of at least one purchase through the card in a foreign location.
