What changed
RBI rejected all requests for extending the September 30, 2013 deadline for implementing UKPT/DUKPT/TLE on POS terminals. Issuing banks must now verify terminal compliance within 3 working days of a fraud complaint and pay the disputed amount within 7 working days, with a Rs.100 per day penalty for delays. Acquiring banks must reimburse issuing banks within 3 working days or face RBI debiting their account.
What it means for you
Banks and lenders face strict liability for fraud at non-compliant POS terminals after September 30, 2013. Issuers must quickly process customer claims and recover from acquirers, while acquirers must ensure all terminals are compliant or bear losses. Non-compliance may also invite penal action under the Payment and Settlement Systems Act, 2007.
What you must do
- Ensure all POS terminals are compliant with UKPT/DUKPT/TLE by September 30, 2013.
- Submit a compliance status report signed by CMD/CEO to RBI by October 7, 2013.
- Present compliance status to the Board in its next meeting and send a board-approved copy to RBI.
- Set up internal processes to verify terminal compliance within 3 working days of a fraud complaint and pay customers within 7 working days.
- Prepare to reimburse issuing banks within 3 working days of a claim to avoid RBI action.
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, Issuing banks, Acquiring banks
What happens if a bank fails to comply with the September 30, 2013 deadline?
Non-compliant banks must compensate cardholders for any fraudulent POS transactions occurring after that date. The issuing bank pays the customer within 7 working days, with a Rs.100 per day penalty for delays, and recovers from the acquiring bank.
How quickly must an issuing bank respond to a fraud complaint?
The issuing bank must ascertain POS terminal compliance within 3 working days of the customer approaching them, and pay the disputed amount within 7 working days, or face a Rs.100 per day penalty from the 8th working day.
What are the consequences for acquiring banks that delay reimbursement?
Acquiring banks must pay the issuing bank within 3 working days of the claim. If they fail, RBI may debit their account to compensate the issuing bank, and penal provisions under the Payment and Settlement Systems Act, 2007 may be invoked.