On October 1st, new credit card regulations will go into effect. In April 2022, the Reserve Bank of India (RBI) published new credit regulations. From October 1, you’ll notice the following three modifications to credit cards: These regulations cover the authorization of credit card limits, tokenization of credit cards, and one-time password requests by card issuers. See more information about them below.
1. Credit card limit Permission
The credit card limit of a consumer can no longer be increased at the credit card issuer’s discretion. The cardholder must approve it and be informed when it has been completed.
Before, only alerts about credit limit increases were sent to holders. No approval was sought before raising the limit. Without the cardholder’s prior written authorization, increasing the credit line limit beyond October 1, 2022, is strictly prohibited.
2. Credit Card Tokenisation
Earlier, third-party payment apps made payments from banks to the platforms using credit and debit card numbers, the holders’ names, and CVVs. By encrypting the credit card numbers, the RBI has developed a card tokenization mechanism to make such transactions safe and secure.
Customers’ credit card numbers can no longer be used by third-party payment apps for purchases. Each credit card number will be converted into an encrypted token number before being used in transactions.
The regulation will become binding on October 1.
3. Card-issuers to seek One Time Password (OTP)
If a cardholder hasn’t activated their card for more than 30 days following the date of issuance, the credit card issuer must first seek one-time-password (OTP) based consent. If the cardholder denies the request to activate the card, the credit card company must deactivate the card without assessing an additional fee within seven business days.