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Credit card fraudsters beware!

A recent directive from RBI makes it having an additional authentication pass code verified by VISA or MSC (Master Secure Code) mandatory. This is over and above what is visible on your card. This is in effect from August 1, 2009 onwards.

Of course, the move -- though painful for credit card customers who may find it a bit inconvenient -- will make it difficult for online fraudsters crawling the worldwide web in search of personal information which they use to defraud thousands of online credit card customers.

Let's see what all it entails for the banks, customers and e-commerce players.

The author works for Apnapaisa.com

Indeed it means extra security for customers thus making online shopping safer.

For banks, it is extra security blanket to curb misuse of credit cards issued by them while shopping online and additional work of issuing these pass codes.

And for e-commerce players, impacting business, owing to additional authentication steps with which customers will take a while to get acquainted.

So all you shopaholics, watch out!

If you make an online transaction now, you will have to enter this additional password given by the merchant. This is commonly known as VBV: Verified by Visa or MSC: MasterCard SecureCode.

Only the cardholder will know this additional security. So in case even if someone takes your card number or you happen to lose your credit card s/he will not be able to use it online for the want of PIN which only you will know.

A call to HDFC Bank's call centre revealed that they already have a system called NetSafe in place which generates a code which can be used only one time.

Besides there is virtual keyboard that enhances the security if one is shopping from a public Internet cafe.

The directive which was issued by RBI in February 2009 have come into force from August 1, and mandates a system of online alerts to the cardholder for all card-not-present transactions if they exceed Rs 5,000. The circular adds that banks would be penalised for non-adherence to the directive under the Payment and Settlement Systems Act 2007.

So the next question which crossed my mind was: how is all this going to function?

The person at the HDFC Bank branch was kind enough to explain the questions posed by a curious customer like me -- obviously oblivious of the larger purpose -- to provide fodder for my article.

He said, once your card is activated with the Verified by Visa / Master Secure service, your card number will be recognised whenever you make an electronic payment.

After you provide your credit card details online, you will be redirected to your issuer's Web site and then required to specify your Verified by Visa / Master Secure authentication details.

Your identity will be verified, and the transaction will be completed. Based on the authentication provided by your issuer, the transaction will be processed and you will get a confirmation.

According to HSBC Bank, any online purchase made, at such a registered merchant with your HSBC credit card will be declined if you have not yet registered the card for HSBC's Secure Online Payment Service.

However, so as not to cause you any inconvenience for purchases that one makes before registration, HSBC will exceptionally process the payment through a secure conditional authentication upon successful verification of customer's personal information.

But the bank stresses that customers register with SecurePay to ensure the maximum protection from online credit card fraud.

SBI Cards already have a process in place and it only processes transactions that are verified  by a separate password. Now the customers will be required to create a password that they would have to enter when transacting online. SBI Card has gone live with these measures on July 1.

However, customers have been given some leeway and can do up to three transactions without a password. Most foreign lenders including Citibank already require customers to have an I-PIN before they can use their credit cards to transact online.

Besides as an online shopaholic you take few more measures to make your shopping more enjoyable like keeping your computer secure and the access to it, avoid sending credit card or account details by e-mail, reject any email that asks you to follow a link to Web site and input account details for verification -- even if the Web site looks authentic and make sure you log out of your online account when finished -- especially at work and cyber cafes.

Oh yea... most banks are offering this facility online; in case your bank is not, then call customer care.

You will go a long way this way...