India has seen the lowest number of credit card fraud cases: Visa

Leading payment system provider Visa today said India has witnessed the lowest number of credit card fraud cases compared to other nations, amid a rise of 'skimming' frauds in recent cases.

"Our country witnesses the lowest number of fraud cases in the credit cards space," Visa Group Country Manager for India and South Asia Uttam Nayak told reporters here. He was replying to questions on the recent cases of fraud reported in the credit card space here. "There may be some element of skimming in the recent fraud cases. Also, the indication is that there may be e-commerce misuse," Nayak said.

Skimming has been witnessed in the country of late, wherein the card data is copied illegally in an otherwise legitimate transaction, only to be used fraudulently later. HDFC Bank, the largest credit card issuer in the country, is changing points of sale terminals at some of its merchant locations due to instances of 'skimming' fraud. Nayak, however, added that the banking system had one of the robust checks and balances to avoid such instances. "There were a second factor authentication, real time fraud control tolls, and better authorisation tolls among others, to check such instances," Nayak said. He also pointed out that customers should know which kind of card they have, whether zero liability policy is available with the card or not. In zero liability cards, a customer stays protected from any unauthorised transactions.

Referring to the use of Aadhar cards in boosting the payment ecosystem, Nayak said this has the potential to include people from the rural areas into the banking fold, which would give a boost to the overall payment system environment. Visa has already tied up with five banks through its payment gateway, using the Aadhar unique ID number to open up bank accounts in unbanked areas.

Credit card spending: Borrowing by GenNext on the Rise

 India's new generation is getting indebted by the day as consumerism is gaining momentum with a rise in credit card spending.

A study by the Credit Information Bureau (India) shows that 53% of bank loan applicants till Nov last year were less than 35 years of age, while 70% of new credit card seekers were also in same age group. Cibil says that about 40% of home and auto loan seekers are young.

Bangalore has the youngest population applying for bank credit with over 70% below the age of 35, while it is the other way round in Kolkata. The eastern state capital has 51% of its borrowers above 35 years of age.

Cibil said demand for unsecured loans has shown a rise in the December 2012 quarter even though the overall economic growth for 2012-13 is projected to be lower at 5%. Overall, the rise in credit offtake has largely been driven by secured products like housing or auto loans.

Credit card is the second-most enquired product. After hitting a low during the global financial crisis of 2008, credit demand has been on the rise of late.

http://articles.economictimes.indiatimes.com/2013-02-20/news/37200393_1_credit-card-cibil-credit-information-bureau

Credit Card Survey by Hindustan Times

Even as the credit card industry in India went through a rough patch in the last four years, with their base shrinking, customers, who were in the habit of using plastic money, were becoming more and more choosy about their issuer keeping in mind the ease of usage and services rendered to

them.

According to an HT-Mars survey, American Express topped the list of multinational credit card issuers followed by Citibank, HSBC and Standard Chartered. Among Indian banks, the HDFC bank's credit cards got the top nod, followed by ICICI bank. Of a total score of 1000, Amex secured the highest points at 796, while the HDFC bank card got a score of 762.

In a market characterised by intense competition, while trying to steer away the risk factors that had led to a default rate touching double-digit figures, credit card majors are trying to woo genuine customers who use plastic money as a matter of convenience and habit. But to retain customers and expand their base carefully, banks and credit card issuers are trying to make all efforts to satisfy them by offering various freebies and discounts.

As per the Credit Information Bureau (India) Limited (CIBIL), that tracks the credit history and credit worthiness of customers, over 80% of consumers today have a good credit history. "All banks are very particular about checking the credit records of customers and their spending pattern and they assess CIBIL's  scores before sanctioning loans in every case," Arun Thukral, managing director, CIBIL said.

The survey, carried out in 12 cities, comprised of a total of 2916 credit card holders who rated their experiences on a variety of parameters, including benefits and services, rewards and redemption, and billing. 

"We believe that we not only offer customers more convenience, but also more control and choice on a global platform. We continue to research opportunities on the digital platform that we believe will change the way payments are made in India," Anand Selvakesari, head, consumer banking at Citi India said.

An average credit card holder in India made annual purchases of about R45,000 until March 2011 on her credit card as against an annual R33,335 in the financial year 2009-10, a growth rate of over 25%, the annual payment card industry survey 2011 prepared by Atos Worldline indicated. Credit card spends increased at points of sale by 22% year-on-year, from R61,824 crore in 2010 to R75,516 crore in 2011, as per industry data.

http://www.hindustantimes.com/business-news/Features/Consumers-go-credit-card-crazy/Article1-980691.aspx

New malware Dexter leading to spurt in credit card frauds as per ET

As per one of the ET reports, Bankers say that the spurt in credit card frauds is possibly caused by a new malware Dexter which has been used to commit digital fraud internationally. 

Typically digital fraud involves hackers breaking into either a banking network or payment aggregator's server or what is being seen as more recent trend -installing a malware in the point of sale. Bankers feel this is likely because the pattern is unlike earlier cases of skimming where numbers are limited and are concentrated in some geographies. 

Dexter is malware, which is of recent origin is termed by payment industry experts as a highly intelligent one as it directly communicates with the command-and-control server and instructs the systems to grab and transmit any credit card data that comes into the machine. The malware uses the retailers network which are typically not secured since they are used for non-critical data. 

"I doubt that this is related to skimming. In skimming there is a physical limitation in the number of cards that can be read also we are getting cases from metros across the country" said a bank official. Also since this fraud is perpetuated at the card acceptance stage it is not limited to one card issuing bank. Although there are other forms of digital fraud such as stealing numbers stored in e-commerce sites, the practice of storing card information on sites is not very prevalent in India. 

In transactions in brick and mortar outlets, the credit card ecosystem typically has three main stakeholders, the bankers who authorize transactions, the point of sale retail merchants and the technology partners who are payment aggregators. Speaking to ToI Rajeev Aggarwal, CEO, Innoviti said that retail merchants should invest in technology partners who are not only help in enabling payments but also ensure that the merchant's own network is secure so that there is no breach. Innoviti provides payment solutions to retail chains. 

"Although credit card information is sent using 128 bit encryption, in typical implementation there is a brief moment when it is open in the system memory. Malwares may exploit this to get access to data. Usage of end-to-end encryption can prevent such access," he said. "We have secured our solutions through incorporate of advanced security mechanism such as Unique Key Per Terminal and Terminal Line Encryption which make the systems future ready as per RBI compliance needs" he added. 

Use of malware in digital fraud has made it difficult for authorities to nab the fraudsters even when there is coordinated international effort. This is because the hacker who receives the information from the Malware does not use it himself but sells it anonymously over the net to buyers across the world. 

Scamsters buy individual information after sampling few card numbers. Bankers say that since cards are invariably blocked after an initial transaction, scamsters buy card information in bulk and these are sold at prices as low as $2 per card information. Once this information is available it can be used to clone cards. Theoretically, card information can be stolen from a retail chain in India, by a hacker in Russia and sold to scamsters in US. 

While RBI has done its best to make transactions secure it cannot prevent international frauds. Since most of the cards issued by MasterCard and Visa are international cards they can be freely used outside the country. The card information can also be used in online transactions because in some countries there are e-commerce sites that conclude a transaction without even the CVV2 number which is printed on the reverse of the credit card. 

RBI: Rs 2,481 cr lying idle in unused bank accounts

The Reserve Bank of India is concerned that several commercial banks are yet to comply with its directive to furnish details of accounts which have been inoperative for a decade or more.

The RBI had asked all public sector and scheduled commercial banks to provide the details of dormant accounts online by 30 June last year, according to a report in The Hindu citing unnamed RBI officials.

As on 31 December 2011, a total amount of over Rs2,481 crore was lying as unclaimed deposits in 11 lakh accounts of various banks in the country, according to the RBI. At a modest estimate, at least Rs100 crore could be remaining idle in banks operating in Kerala alone.

RBI officials said the apex bank had not extended the deadline and a circular was issued as a follow-up to all banks to review the position by 30 September 2012. Most banks have complied with the norms, an official said.

State Bank of Travancore, one of the major public sector banks operating in Kerala, maintained that the process of furnishing the account details was underway. The delay was on account of the large number of inoperative accounts, a senior official of the bank said. The bank has initiated steps to trace inert accounts holding a low balance and follow-up measures have been initiated.

''The RBI directive has prompted Union Bank of India to contact many dormant account holders and about 40-50 per cent of them have been reactivated,'' a top official of the bank said. Some of the accounts are operated by government departments and involve litigations.

The total amount of unclaimed deposits is being mentioned in the balance sheets regularly, he said.

Carelessness, migration, death of the account holder and failure of the legal successors to submit evidence are among reasons behind the existence of inoperative accounts.

The RBI wanted the banks to adopt a customer-friendly policy with a view to helping the account holders or their successors to revive the accounts.

Visa profit up 26 per cent at $1.29 billion

Visa Inc, the world's biggest payments network, has reported a fiscal first-quarter profit that bettered analysts' projections on increasing card transactions by consumers.

Net income for the three months ended 31 December was up 26 per cent to $1.29 billion, or $1.93 a share, from $1.03 billion, or $1.49, a year earlier, according to the  California-based company's statement yesterday.

''Results include significant continued investments in our core business, accelerating international expansion and the deployment of next-generation payment solutions,'' chief executive officer Charlie Scharf, who took over from Joseph W Saunders in November, said in the statement.

The company had set a goal of over 50 per cent revenue collections from outside the US by 2015, which according to analysts would be helped by a global consumer shift to electronic payments, particularly in the Asia-Pacific region.

Spending on Visa debit and credit cards in the Asia-Pacific region, the firm's second-biggest market after the US, was up around 13 per cent, according to the company. Purchases were up 37 per cent in Central Europe, the Middle East and Africa, even as spending in Central and South America and the Caribbean increased around 22 per cent.Purchases across the region are expected to generate 42 per cent, or $9.03 trillion, in worldwide card spending at merchant establishments in 2016, up from 36 per cent at the end of 2011, according to The Nilson Report, an industry newsletter.

Quarterly profit at the company beat estimates for the ninth consecutive quarter thanks to growth in credit, debit and transactions at the world's largest payments network.

Visa and rival MasterCard Inc have been working to popularise card and online payments in parts of the world dominated by cash transactions.

 Visa's purchase volumes grew 9 per cent to $1.1 trillion in the first quarter, the fastest rate of growth in nine months even as transactions on the company's Cybersource online payments network shot 28 per cent, the quickest pace in five quarters.

 Visa also has expansion plans in the emerging markets and would provide payment services under a biometric identification programme being implemented by the Indian government.

According to the company, with increasing electronic payment operations and rolling out its digital wallet service, V.me, it would continue to invest in new services.

Scharf said on a post-earnings conference call that the work on mobile payments continued both organically and with the acquisition of Fundamo. He added, it was a critical access point to its network and continued in that it was absolutely critical for the company.

 Visa acquired South Africa's Fundamo, a mobile payments company with a significant presence in emerging markets for around $100 million in 2011.

Twitter Amex together!!!!

In an extension of its deal with Twitter, American Express will now let users link their credit cards to their Twitter account to let them buy products directly from within Twitter.

American Express started distributing offers and coupons on Twitter a year ago through Card Synch, making it the first time users can actually make purchases through Twitter. By tweeting special hashtags, customers would now be able to buy American Express Gift Cards and products from Amazon, Sony, Urban Zen and Xbox 360.

According to  Leslie Berland, senior vice president, digital partnerships and development at American Express, based on the initial success of Amex Sync for offers, the company knew there was significant power in combining its assets with Twitter's platform to bring value to Cardmembers and merchants.

He added, the company was now leveraging its unique technology and closed-loop network to introduce a seamless solution that redefined what was possible in the world of social commerce.

According to American Express, all products would be shipped to the card member's billing address via free two-day shipping.Cardmembers could sync their cards in advance by visiting sync.americanexpress.com/twitter, then tweet special product hashtags for the product they wanted to buy with their synchonised card, and AmexSync would then respond with a confirmation hashtag; tweeting it back within 15 minutes confirming the purchase.

According to analysts, the new tie-up between Twitter and American Express would see the social media service turn into a shopping cart. American Express members who sign up would be able to buy products by mentioning the appropriate hashtag in a Tweet.

Announcing the partnership yesterday the companies have kicked it off with a single product offering, a $25 American Express gift card for $15. Other products would be available starting tomorrow.

The first discounted products from American Express that would be on sale are an Amazon Kindle Fire, a Sony Action cam, a Donna Karan designer bracelet and an Xbox 360. Though various companies would tweet out the hashtags, all official product offers would be collected under the American Express Favorites section.

This is not the first instance of American Express experimenting with social media. The Amex Sync programme launched last March, offered discounts on Twitter, Foursquare, Facebook and Xbox Live.