Abandoning 2-step verification in low value transactions

Adhil ShettyBankBazaar.comIf you are a credit card holder and do a lot of small value transactions, there is good news for you in store. In its constant attempt to simplify banking transactions, the Reserve Bank of India is likely to do away with the two-step verification process for some payments.RBI will soon take a final call on the proposal whereby the mandatory two-stage authentication for low-value credit card transactions could be scrapped, making it convenient for both the consumer and the merchant to carry out the financial transactions.It is believed that the RBI could offer abandoning of two step verification process for the contactless credit card holders. This, if approved, is likely to popularize the contactless credit card market in India which is currently at a nascent stage.  How does this impact you as a credit card holder? Does it in any way compromise your card security? Let’s understand how the two-step verification process works in order to answer these questions.Understanding the two step verification processAs of now, when you make any purchase using your credit or debit card, even if it is a small buy, you need to undergo a two-stage authentication process. In the first stage, you need to provide the PIN for the card. In the second authentication stage, a onetime password is generated and sent to your linked mobile phone to make sure the authentication rules are followed. This onetime password needs to be entered at the Point Of Sale system to complete the transaction successfully.What happens when the two-step process is removed?  With the change in the process from two-stage authentication to a single authentication system, you would need to enter just one authentication password. The proposal is to abandon this for all transactions below Rs.2000. This would make shopping both easy and convenient for both you and the merchant.The safety and security of Credit Card transactionsMoving from a two-fold security layer to a single security layers may appear to dilute the current security mechanism and standards. Many consumers apprehend that this would affect the safety of online transactions. But, in reality, online transactions remain absolutely secure.Technology has advanced convincingly over the years and would facilitate enhanced card safety in many other ways, even if the two-step verification process is abandoned. The secure code system offered by Master and Visa Cards (the MasterCard SecureCode and Verified By Visa Code) are enhanced protections offered for online transactions. Most sites that facilitate card transactions are also protected by encryption protocols such as Secure Sockets Layer (SSL) technology. This is a protective technology preventing the access of your data, like your card number and personal information, from being accessed by a third party when used through them.The Reserve Bank is also considering innovative payment processes for enhancing the convenience of users without having the mandatory additional factor of authentication (AFA). The initiation of contactless cards is one such measure, ensuring more safety for the users. Contactless cards are the next big thing in the world of plastic money. They operate using the Near Field Communication or NFC technology. It enables you to make merchant payments by simply presenting the card at merchant terminals without having to swipe it at the Electronic Data Capture (EDC) machine or Point of Sale (POS) terminals. All contactless cards will necessarily adhere to EMV standards as well.However, it is the responsibility of the customer to report any loss of cards or wrong transactions to the bank immediately thorugh any of the available multiple channels.The Reserve Bank of India is known to keep consumer interest paramount and the abandoning of the two step password authentication prices would in no way undermine the security aspect of the card. The sole objective here is to do away with time-consuming process and make card usage more convenient for the card holder, especially for small value transactions.