Friday, February 24, 2017
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A plastic comfort in a digitally savvy world

The RBI has relaxed the much needed one time password (OTP) to authenticate all card transactions

By Anagh Pal

In a span of a month, 2,000 is the figure on everyone’s head. After launching the new currency note of Rs 2,000 denomination, the RBI relaxed the much needed one time password (OTP) to authenticate all card transactions rule by making transactions up to Rs 2,000 to have an optional OTP. In India, online transactions have a two factor authentication. So when you are using a credit or debit card to make an online payment, you enter your card number and your CVV number, which is the first level of authentication and then you are sent a one-time password on your phone which you need to put in to complete the transaction.

The reason for this two step process is to protect the interests of the card holder. So, even if your card is lost or misplaced, it cannot be misused until you authenticate the OTP which is sent to your registered mobile number. However, there is no such OTP authentication when you are using your card outside India or on foreign portals. So, for a transaction on Amazon US, once you have shared your card details, there will be no more authentication required.

Now, in a push to promote more digital transactions, the government has done away with service tax on transactions up to Rs 2,000 through your credit or debit card. At the moment, there is a 15 per cent tax on such transactions. The exemption is part of the government's all-out initiative to steer the country away from a cash economy to digital transactions.

Promoting digital transaction is welcome but it does have its share of security concerns, especially if you are a frequent user, as the RBI note also mentions the liability will also be on the card holder and not be the concern of the bank or card networks like Visa, Amex and MasterCard. Here is one more reason for you to go plastic henceforth.

 

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