Was your credit card suddenly disabled for international use? We tell you why

Many banks are sending SMSes to customers informing them of disabling cards for international transactions if they haven’t been used previously internationally

Kumar Shankar Roy Mar 17, 2020

various types of credit cardsMany credit card users are shocked to see the following SMS from their bank in the past two to three days. “…International POS usage on your credit card ending XX has been deactivated.” Such credit card users are confused because they never asked the bank to deactivate the international usage facility. Was your card too suddenly disabled for international use? Relax. It is a safety measure adopted by card issuers. Read on to know more.

RBI directions

Over the years, the volume and value of transactions made through cards have increased manifold. To improve user convenience and increase the security of card transactions, the Reserve Bank of India on January 15 announced three key steps. Note that the below directions, issued under Section 10(2) of the Payment and Settlement Systems Act, 2007 (Act 51 of 2007), came into effect from March 16, 2020.

1. At the time of issue / re-issue, all cards (physical and virtual) will have to be enabled for use only at contact based points of usage [viz. ATMs and Point of Sale (PoS) devices] within India. In these cases, the card will have to be presented physically.

Card issuers were also directed to provide cardholders a facility for enabling card not present (domestic and international) transactions, card present (international) transactions and contactless transactions. ‘Card not present’ means online usage mostly.

2. For existing cards, RBI left it to the card issuers to take a decision, based on their risk perception, whether to disable the card not present (domestic and international) transactions, card present (international) transactions and contactless transaction rights. This means even PoS usage could be disabled for internationally usable cards.

Also, existing cards which have never been used for online (card not present) / international / contactless transactions were to be mandatorily disabled for this purpose.

3. The card issuers were directed by the RBI to provide all cardholders facility to switch on / off and set / modify transaction limits (within the overall card limit, if any, set by the issuer) for all types of transactions – domestic and international, at PoS / ATMs / online transactions / contactless transactions, etc. This facility would have to be given on a 24×7 basis through multiple channels – mobile application / internet banking / ATMs / Interactive Voice Response (IVR).

Plus, alerts / information / status, etc., through SMS / e-mail, as and when there is any change in status of the card would have to be sent.

International use risks

International payments through cards are considered high-risk. Firstly, internationally usable cards have seen a number of instances of fraud. Two, internationally usable cards have higher charges than with domestic payments.

The various fraud instances related to international use of cards have made both the RBI and banks cautious. Despite being in the country and in possession of their credit cards, many people found massive amounts of international credit card transactions on their cards. If fraudsters have access to an internationally usable credit card number, they could previously often use the card to shop at various foreign websites and thus defraud gullible people. Online frauds have been growing especially when it came to international use.

To reduce the chances of frauds, banks for existing cards now have started disabling the card for international transactions, be it PoS or online. Existing cards, that have never been used online for international transactions, are also being disabled for this purpose.

Kumar Shankar Roy

Kumar Shankar Roy is contributing editor with RupeeIQ. Kumar is a financial journalist, with a functional experience of 15 years. He tracks mutual funds, insurance, pension, PMS, fixed income/debt and alternative investments markets closely. He has worked for The Times of India, The Hindu Business Line, Deccan Chronicle Group, DNA, and Value Research, among others, across different cities in India. He is deeply interested in marrying data insights with actionable opinion. He can be contacted at [email protected]

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