What changed
RBI has permitted a parallel run of the new additional authentication system for IVR transactions for one month up to January 31, 2011. During this period, IVR transactions will not be declined solely for lacking the additional factor. After January 31, 2011, all IVR transactions must comply with the additional factor authentication. Additionally, RBI has asked banks and card companies to revert by February 28, 2011 on the process for recurring transactions (utility standing instructions) and MOTO transactions (travel/hotel bookings).
What it means for you
Banks get a short window to test the new authentication system in live environment without penalizing customers for non-compliance on IVR. This reduces immediate operational risk but requires swift action to ensure full compliance by end-January 2011. The call for input on MOTO and recurring transactions indicates RBI is considering exemptions, but banks must prepare detailed proposals by February 28, 2011.
What you must do
- Ensure IVR systems are upgraded to support additional factor authentication by January 31, 2011.
- Communicate with merchants and customers about the parallel run period and the mandatory compliance deadline.
- Prepare and submit proposals to RBI by February 28, 2011 on handling recurring utility payments and MOTO transactions.
- Monitor transaction declines during the parallel run to minimize customer inconvenience.
- Coordinate with card networks to align on implementation timelines and testing.
Who it affects
All scheduled commercial banks including RRBs, Urban Co-operative Banks, State Co-operative Banks, District Central Co-operative Banks, Authorised card payment networks, Merchants handling IVR and MOTO transactions
What is the parallel run period for IVR transactions?
RBI has allowed a one-month parallel run from the date of the circular (December 31, 2010) until January 31, 2011. During this period, IVR transactions will not be declined solely for lacking additional factor authentication.
What happens after January 31, 2011 for IVR transactions?
After January 31, 2011, no IVR transactions will be permitted unless they comply with the additional factor authentication requirement.
Are MOTO transactions exempted from additional authentication?
Not yet. RBI has asked banks and card companies to revert by February 28, 2011 on the process for MOTO transactions and recurring utility payments. Exemptions are under consideration.