Security Over Convenience? RBI Steps to the Plate

Security Over Convenience? RBI Steps to the Plate

Posted by John B. Frank Monday, July 27, 2009

Added security call may hit online biz
27 Jul 2009, 0012 hrs IST, Harsimran Singh, ET Bureau

NEW DELHI: The new Reserve Bank of India (RBI) guidelines, which becomes effective from August 1, to provide a third-factor identification for all online transactions may trigger a 25-30% decline in daily business.

The mandatory third verification is in addition to the card number and the three- or four-digit card verification value (CVV) number that appears on the back of a credit card.

The new norm will introduce a third screen to the processing steps and will make the online transaction longer in a country where low bandwidth has already made e-commerce a time-consuming and tedious process.

It could potentially throw the $2-billion B2C commerce out of gear. Says Jankiraman Murugavel, founder CEO of BharatMatrimony.com: “As it is the internet speed in India is dismally low. It takes a lot of time to complete a transaction. With this move, an additional third screen will be created which might drop transactions further.”

The RBI has asked banks to provide credit card users with an additional authentication / validation password for all online card transactions.

RBI’s purpose behind these guidelines is to enhance the security of online transactions, so as to reduce online credit / debit card fraud.

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