Also read the related stories in The Economic Times as follows:
Online credit card dealings may dip after new PIN systems
4 Aug 2009, 1213 hrs IST, ET Bureau
MUMBAI: Online credit card transactions may see a dip in August as only 20-30% of online credit card users have signed up for the second Personal Identification Number (PIN). But, banks are expecting a pick up in the numbers as they have started sending out SMS and email alerts to their customers in the past few days.
An ICICI Bank spokesperson said: "We have started sending out email and SMS alerts very recently and are receiving a very good response for registration from credit card customers as there are no exceptions to the RBI guideline." ICICI Bank has 20 million registered users for internet banking.
Interestingly, the number of active, online credit cards users is estimated at 4-5 million out of 30 million credit card customers in India.
According to industry estimates, only 7-15% of a bank's customer base sign up for net banking. Of these registered customers, 30-40% use net banking frequently.
Even newer entrants such as Kotak Mahindra Bank have seen 10,000 out of 15,000 customers sign up for second factor authentication. For customers who haven't registered for the additional password yet, banks have a provision of signing up for these passwords on their web sites even now. RBI had asked banks to implement two factor authentication to ensure safe and secure online transactions from August 1.
"Having an additional password was a voluntary exercise till last month. RBI stipulations now make it compulsory. It's just a single password but if banks insist, we can even introduce features like a one-time password going forward," said TV Seshadri, vice-president & country general manager MasterCard Worldwide.
Visa and MasterCard introduced Verified for Visa and MasterCard Secure codes, respectively, a few months ago to get customers used to the practice. Customers had to create an additional online PIN which wouldn't be mentioned on the plastic.
Online use of debit/credit cards got a fillip after the introduction of online railway and flight bookings. Web sites such as IRCTC, make my trip and yatra.com witness maximum number of hits. However, credit card customers have increasingly started paying utility bills such as mobile and electricity through net banking, bankers said.
According to a study conducted by RSA, major Indian banks lost funds to the tune of Rs 36.5 crore on account of fraudulent transactions and 13,000 such cases were filed in India.
"The two-stage security screening makes the possibility of fraud or theft of username and password of a customer nearly impossible as it involves simultaneous use of multiples gadgets like a computer and mobile phone," said KVS Manian, group head retail liabilities & branch banking, Kotak Mahindra Bank. A security breach can happen only if the customer becomes careless at his end.