Using Credit Card to do big purchases show your ID PROOF

Now if you plan to do purchasing of big amount using your credit card then you have to proof your identity. Banks and payment processing firms such as Visa Inc. and MasterCard Worldwide have started a new drive under which you will be requested to provide an ID proof. This new drive has been started in order to prevent the fraudulent use of credit and debit cards.

Recently Rupesh Shah, 30-year-old purchased 32-inch LCD television set at a Croma store in Mumbai. He offered his credit card to make payment of Rs 40,500 but the store man asked him to provide proof of identity.

ICICI Bank Ltd. Is country’s largest credit card issuer among the private sector bank with around 8.5 million cards, has informed its customers that they might have to provide their identity proof at merchant outlets (or stores) in case do purchasing of big amount using credit card.

Although most banks have directed merchants to check the identity proof when a customer makes high-value payment with credit card in order to prevent fraudulent transactions but some of them have taken this responsibility on themselves. For instance Praveen Bansal, deputy general manager, transaction banking department, state owned bank Union Bank of India, told, “Written to all our credit and debit card holders to register their mobile phone numbers with the bank. For transactions over Rs500 on credit or debit cards, we send an SMS to the customer giving details of the transactions”.

However some of the customers are reluctant to produce ID card every time they do purchasing of high-value with credit cards but most of them have realized that this measure will protect their money, too.

Ravi Prakash Jha, store manager at an outlet of The Mobile Store in Mumbai, a chain that sells wireless phones and accessories said, “We ask for an identity proof from people who make purchases of Rs7,000 and above on their credit or debit cards”. “Consumers are hesitant to show their identity proof, but they are cooperating with us because we tell them that this process will help prevent misuse of their cards.”

Although some of the consumers agree, with the usefulness of the ID measures. Sandeep Tiwari, an accounts manager with a real estate developer who was asked for an ID proof when he bought a Nokia phone for Rs8,000 at The Mobile Store told, “It’s a good way to prevent misuse of cards and avoid fraudulent transaction, but I feel that this is not a foolproof plan because it’s very easy for fraudsters to forge identity proof such as driving license, and they can still misuse the card”.

However there is variation in the definition of high-value transactions across banks and merchant establishments. According to anonymous official working with a payments processing company, “a customer will have to provide an identity proof for purchases of Rs7,500 and above at a jewellery store, purchases of over Rs5,000 at a mobile store and purchases of over Rs8,000 at an electronic showroom”.

C.S. Jain, executive director, head of personal banking group, IDBI Bank informed IDBI Bank Ltd, for instance, has directed merchant outlets to check the ID proof of the card users doing purchasing of worth exceeding Rs10,000. “IDBI Bank debit card holders receive SMS alerts for any transaction over Rs10,000. These are the steps the bank takes to check frauds.”

According to the Reserve Bank of India (RBI) data provide in July bulletin in India by 31 May, there are around 48.42 million credit cards users with a total outstanding amount of Rs9,748.31 crore. Whereas by the end of May there are around 283.58 million debit card users in the country, and the spending on debit cards amounted to Rs3,665.91 crore, according to the central bank’s figures.

The senior official from a payments processing company quoted in the first instance, “The fraud to sales ratio in India is at 0.12 which means of every Rs100 spent 12 paise is lost”. “The fraud ratio is not alarming. It has been stable at around 0.12 for the past two-three years, but to ensure it remains low, we have introduced this best practice.”

A senior official with Axis Bank Ltd has 600,000 credit cards and 125,000 point-of-sale (PoS) terminals informed, “Fraudsters usually rob cards and make purchases of electronic items and jewellery as they have resale value.” PoS terminals are machines that read credit or debit card information and approve or reject a transaction.

An anonymous person said, “Frauds are also rampant at curio shops, which are largely visited by tourists. Certain cities like Agra, Coimbatore and Chennai are places where card frauds are rampant”.

In February, then minister of state for home affairs Shakeel Ahmad had informed the Lok Sabha that between April and December 2008, ICICI Bank had informed the RBI about 8,280 cases of credit card fraud worth Rs11.47 crore.

While American Express Banking Corp. accounted 703 cases due to which it faced a loss of about Rs6.04 crore and on the other hand 2,484 cases of fraud were reported by Hong Kong and Shanghai Banking Corp. (HSBC) due to which it faced a loss of Rs4.90 crore, Ahmad told Parliament. The other foreign banks which also listed the loss were Citibank incurred losses of Rs4.73 crore, Standard Chartered Bank, reported Rs2.39 crore and Deutsche Bank, Rs2.09 crore, all during the same period.