RBI had mandated a second factor authentication based on information not present on the cards with effect from August , 2009. This measure enhanced the confidence of customers as evidenced by the spurt in online transactions in the recent past. The second factor of authentication has been mandated for Interactive Voice Response (IVR) transactions from February 2011 and for the residual transactions ( Mail Order Telephone Order transactions, hotel bookings etc.) with effect from May 2012.
RBI has also mandated issue of online alerts to customers for all card transactions irrespective of the value of the transaction or the channel used. This measure will at least help a customer to remedial action to prevent further misuse of his card. RBI is playing its part brilliantly in making online transactions more secure and safe. Moreover, there is already a product exists in the payment solution world that protects the customer from online frauds which is Virtual Card.
What is Virtual Card?
As the name suggests, it's a virtual (not physcial)/intangiable in nature. For any online transactions, details required are card number, expiry date and CVV. So, all these details of virtual card are provided online, without any physical card.
How does it works?
Virtual card is linked to your existing credit card; implying that it's just a new card (with new card number) while retaining all the characterstics of your existing card (billing date, credit limit etc.). You can fix a lower limit on this card. Fixing a lower limit actually limits your online exposure in case details of virtual card get compromised.
For eg, if you have an actual card with credit limit of Rs. 100,000. You can create a virtual card with credit limit of Rs. 5,000. In case of online fraud on virtual card, card can be used upto Rs. 5,000 only.
Most of the Indian private banks do offer virtual card facility.
For ICICI Bank virtual card offering, please check http://www.icicibank.com/infinity/virtualcc_faq.html
For HDFC Bank virtual card (NetSafe card) offering, check http://www.hdfcbank.com/personal/making_payments/making-payments-details/netsafe/gts8mitl
Kotak Mahindra Bank netc@rd, http://www.kotak.com/bank/personal-banking/cards/faqs-netcrd.html
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