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Shopping online using a credit or debit card: Verified by Visa / MasterCard mandatory from 1st Aug 2009

To prevent online frauds, RBI has mandated that all online transactions using a credit card or a debit card should have an extra layer of security (a password) starting 1st Aug 2009.

The Reserve Bank of India (RBI) has declared that all online transactions using a credit card or a debit card would need to have an extra layer of security (a password) starting 1st Aug 2009. This is being done to prevent online frauds.

Debit cards already have a PIN (Personal Identification Number) assigned to them. So, this directive is more applicable for credit cards.

The background

Currently, if you have someone’s credit card with you, you can easily make an online purchase using it – without any extra information from the cardholder.

Thus, if you drop your wallet on the road, and someone finds your credit card in it, he can easily buy from the internet using it.

In fact, even physical presence of the credit card is not necessary – if the person has the details of your credit card, he can buy online!

Let’s say for example you pay using a credit card in a restaurant, and the waiter takes the card for swiping it. On his way in, if he notes down your name, the card number, the expiry date and the CVV number (Card Verification Value or the security number), he can very easily use this information to shop online!

(Note: CVV is the 3 digit number printed at the back of the card. Usually it is printed on the strip where you have your signature, and is printed after the credit card number itself)

Bottomline: Today, all the information necessary to use a credit card online is printed and available right on the credit card itself! This makes it prone to fraudulent use.

The change being proposed by RBI

RBI is making an extra step of authentication compulsory for all online purchases made using a credit card.

Thus, apart from all the information needed today (name, card number, expiry date and CVV number), you would also need a password (also being referred to as PIN or a Personal Identification Number) for online transactions.

This password would, of course, not be printed on the credit card and would be known only to you – the card holder. This would ensure that only you can buy online using your credit card.

Thus, going forward, all online credit card transactions would need to follow the “Verified by Visa” (VBV) or “MasterCard Secure Code” (MSC) process.


This rule applies only to online transactions of Rs. 5,000 or more in value. Thus, you do not need a password for internet-based purchases of Rs. 4,999 or less.

This rule is also not applicable to credit cards issued outside India.

How would you get this password?

The bank that has issued the credit card to you would be providing this password to you.

Most banks have set up online facilities, where you need to register your credit card by entering your personal and credit card details. The password would be generated for you by the bank. Some banks also allow you to specify your own password.

Some banks are allowing their customers to use their internet banking or transaction password for this.

Some banks are preferring to generate this password at their facilities, and are sending it out through post or courier.

Some of the banks that are already working on providing this password to their customers are:

  • ICICI Bank
  • State Bank of India (SBI)
  • HDFC Bank
  • Citi Bank
  • Kotak Mahindra Bank
  • Axis Bank

The impact

This move would have a short term negative impact – the volume of internet-based transactions would go down, as not everyone would have obtained a password / PIN. But over time, this situation would correct itself.

On the other hand, this additional security layer would make online usage of credit cards extremely safe. This should give all credit card holders the confidence to shop online!

What should you do?

If you own a credit card, register it today with your bank and obtain a password. Although it looks like a cumbersome extra step, remember:

  • This is a one time thing (you have to obtain the password only once)
  • It is totally free, and
  • It is for your own security!

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