Present scenario
The use of payment cards in India for transactions has been increasing at a faster rate. According to the Reserve Bank of India there are close to 400 million payment cards in circulation in India (2013). The number of cards used has more than doubled in the recent five years period. The transaction volumes using payment cards also show healthy increase of close to 40% annual growth rate in the recent past. However, with the increase in growth rate of use of payment cards, there has been proportionate increase in card frauds.
Top card issuing banks have seen unauthorized transactions in millions of rupees. One of the reasons for such unauthorized transactions is that swipe machines in retail outlets and online transactions have been accessed by hackers and compromised to read and transmit card information. All top card issuing banks such as ICICI Bank, HDFC Bank, Citibank, SBI Cards and Axis Bank have been affected by these frauds. The loss in such frauds is to the account for the card issuing banks and it adds a lot of financial burden to the banks. The Reserve Bank of India (RBI) directive says that banks will have to bear the cost of fraudulent card transactions.
OTP Cards
One of the solutions to safeguard card users against such hackers is to have better security features added to the payment cards. This is where OTP display cards play a major role. OTP display cards offer an alternative to today’s payment cards in use in India. OTP display cards offer additional protection as the password is generated by the card each time the card is used and there is little chance that the password can be used by hackers. This will make the transactions safe and secure.
Challenges
Among the leading banks in India, presently ICICI Bank offers OTP display cards. The use of OTP cards is yet to get prominence in India. One of the challenges faced by such cards is that mobile banking applications can act as a substitute for OTP cards. However, it is to be noted that there could be additional charges by mobile phone operators for such services. Further, cost of replacing the current payment cards with the new OTP cards also adds to the challenges. Again, the customers may be reluctant to switch to a new card as they are comfortable using the mobile banking application along with the present cards. Given the challenges, the banks should spend time and effort to educate the customer on the advantages of OTP cards. This will lead to increased adoption of OTP cards in India.
