The Reserve Bank of India recently informed through a letter that they will soon be enhancing the security of card transactions, due to the growth in transaction volume and value.
Based on this instruction, banks will have to decide whether or not to disable existing credit cards for online-local and online-international purchases.
What is the most likely scenario? In order to be compliant with RBI security-enhancing measures for existing cards, banks will probably limit cross-border online transactions, as these are not 3DS protected. On the other hand, local transactions through credit cards are indeed protected through mandatory 3DS, so these local transactions will lilkely remain enabled through this operation.
But the RBI showed less flexibility for newly-issued cards. The release is more cutting and specific when stating that newly-issued cards will be enabled for transactions through “contact based points” only, this is, ATMs and Point of Sale devices within India. For not present transactions, issuers will need to provide cardholders a facility for enablement, such as switching on/off and setting/modifying transaction limits.
Avoid the friction
So the question you may have is how to avoid adding friction to the checkout process, and losing valuable, card-paying customers of today and tomorrow? The answer is: going local. As you can tell, RBI security enhancements main focus seems to be on non-protected payments. Both local card and UPI payments do have stronger security mechanisms.
How do you go local in India?
- Switch to local processing: by routing payments through local acquirers, and considering that existing cards will probably remain enabled for local transactions, merchants will be able to keep selling their products or services to hundreds of millions card-holders in India.
- Start accepting UPI: key payment methods such as UPI allow international merchants to claim their part of the 53% share of online-spending that is not being completed with a credit card. In addition, UPI is the fastest-growing payment method in India, which makes it the safest bet for merchants looking forward to boost their sales in this giant market.
Learn more about UPI and local payment in India here.