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Debit Cards
How banks charge you for using these
As a banking product, debit cards have gained in popularity over recent years, with more and
more consumers swiping these more and more. Sample this – while debit-card usage in ATMs
dropped by 18 per cent between August 2013 and August 2018, its usage at point-of-sale (PoS)
outlets increased by 200 per cent during the same period. At the same time, this is also true that
when a certain product begins to be used extensively, the negative features/fallouts come to the
fore. In the following report, we will focus on these aspects and also assess the various banks’
offerings on some standard parameters.
Subas Tiwari & Gopal Ravi Kumar

F
or this study, we chose private banks mainly considered their people-to-bank network ratio in
because they are more aggressive in their the country as measured in the number of branches
approach in providing latest technologies serving customers. Narrowing it down, we selected
to customers, as compared to nationalized those private banks that were operating more than
banks. Among the private banks, we 500 branches in India.
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What are e-payments? In India, total debit cards in circulation as on

An e-payment system is a way of making November 2017 was 731,332,595 and this grew
transactions or paying for goods and services to 805,522,146 as on August 2018, thereby
through an electronic medium, without the registering about 109% growth. Consequent
use of cheque or cash. It's also referred to as an growth in rupee value was 2,492,721.70 Mn
electronic payment system or online payment (November 2017), as against 2,759,761.00 Mn
system. (August 2018), which is a jump of 109.67%.

The final 12 banks were compared on their charges,

if any, for services/facilities such as card issue, annual CV RECOMMENDATIONS
maintenance, PoS transactions, transactions per month Best Buy
at ATMs (own bank), ATM-transaction fee (beyond
limit), international card-transaction fee, renewal of
Yes Bank
card, and issue of duplicate card/PIN. We gave the
Good Buy
highest weightage (20 points) to customer feedback,
which also helped in determining the most important Tamilnad Mercantile Bank
and beneficial variables. These variables have a direct
bearing on the product structure. Our questionnaire Fair Buy
covering various features of banks’ debit cards received Karur Vysya Bank
responses from more than 500 customers.

CONSUMER VOICE JANUARY 2019 • 35

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BFSI

E-PAYMENTS THROUGH DEBIT CARDS:

CV
Tamilnad Karur Vysya
Weightage e-Payments thru Debit Card Yes Bank
Mercantile Bank Bank
Points (100)
10 Card-issue fee 149 (4) Nil (10) 125 (7)
10 Annual-maintenance fee 149 (4) 100 (7) 175 (2)
5 Renewal of card fee 149 (3) NS (0) Nil (5)
5 Issue of duplicate PIN fee 50 (3) 50 Nil (5)
5 Duplicate-card fee 149 (3) 200 (3) 100 (5)
10 PoS transaction charge (%) NS (0) Nil (10) NS (0)
Free transactions per month at ATMs
10 Free (10) Free (10) Free (10)
(own bank) (no.)
Free transactions per month at other
10 5 (4) 5 (4) 5 (4)
banks’ ATMs (no.)
5 ATM transaction fee (beyond limit) 20 (3) 20 (3) 20 (3)
International card-transaction fee (cash
5 120 (5) 100 (5) 125 (5)
withdrawal)
International card-transaction fee
5 20 (5) NS (0) 25 (2)
(balance enquiry)
20 Customer feedback 18 6 5
Total 62 61 53

Notes:
a) Information given here has been sourced from banks’ websites and brochures as on 03-12-2018.
b) Unless specified otherwise, all figures are in rupees.
c) NS – not specified
d) For the purposes of this study, we have considered only those private banks that have 500 or more branches in India.
e) The figures mentioned above pertain to metropolitan branches.
f) In many banks the GST is included in service charges and is hence not specified here.
g) Charges for services described differently in nomenclature are grouped under major heads.

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A COMPARATIVE CHART

Federal Lakshmi Karnataka HDFC Axis IndusInd City South Indian Bandhan
Bank Vilas Bank Bank Bank Bank Bank Union Bank Bank

Nil (10) Nil (10) Nil (10) NS (0) Nil (10) 249 (2) Nil (10) 200 (2) 200 (2)
150 (4) 100 (7) 150 (4) 200 (2) Nil (10) 249 (2) NS (0) 200 (2) 200 (2)
Nil (5) NS (0) NS (0) 200 (1) NS (0) 249 (1) Nil (5) NS (0) NS (0)
50 (3) 100 (1) NS (0) 50 (3) Nil (5) 20 (3) NS (0) 100 (1) NS (0)
300 (1) 200 (3) 100 (5) 200 (3) NS (0) 249 (1) 250 (1) NS (0) NS (0)
2.5 (5) NS (0) 2.5 (5) Nil (10) NS (0) NS (0) NS (0) NS (0) NS (0)

NS (0) Free (10) 8 (7) 5 (4) 4 (1) Free (10) NS (0) NS (0) Free (10)

Free (10) 3 (1) 8 (7) 3 (1) 4 (2) 5 (4) 5 (4) 5 (4) 5 (4)

20 (3) 18 (5) 20 (3) 20 (3) NS (0) 20 (3) 20 (3) 20 (3) 20 (3)

100 (5) 100 (5) 150 (2) 110 (5) NS (0) 125 (5) NS (0) 150 (2) 125 (2)

25 (2) 25 (2) 25 (2) 25 (2) NS (0) NS (0) NS (0) 25 (2) 25 (2)

3 4 2 10 8 3 6 2 1
51 48 47 44 36 34 29 18 29

There are usually two types of charges on a debit d) One can always check their virtual account and
card. One is the annual fee that a bank charges for keep track of their transaction history.
issuing the card to the customer. The other is the e) One can reach more clients from all over the
convenience fee that is charged at merchant outlets world, resulting in more sales.
for swiping the card at a point-of-sale (POS) terminal.
A customer is entitled to eight free monthly And the Limitations
transactions at an ATM (five at their home bank a) Difficult for a non-technical person: Most of
ATMs and three at non- home bank ATMs) in a the digital payment modes are based on mobile
metro city. Thereafter, a bank charge is levied on phones, the internet and cards. These modes
each ATM transaction. may be somewhat difficult for a layperson to
understand and accept.
The Advantages in Digital Transactions b) The risk of data theft: Hackers can attack the
a) The biggest advantage is convenience. Customers servers of the bank or the e-wallet you are using
can pay for items on an e-commerce website and get your personal information. They can use
at anytime and anywhere. They just need an this information to steal money from your account.
internet-connected device. c) Overspending: You keep limited cash in your
b) Lower transaction costs and decreased technology physical wallet and may think twice before buying
costs make it more convenient and simple. anything. In digital payment modes, you have all
c) Transactions are made in seconds without wasting your money with you always. This can result in
customer’s time. overspending.
CONSUMER VOICE JANUARY 2019 • 37
In the News
BFSI
Do These • Avoid obvious/easy-to-guess PIN numbers –
• Sign immediately on receipt of the debit card (at for example, car number, date of birth, house
the back). number.
• Change the PIN at frequent intervals. • Do not lend your debit card to anyone as this card
is non-transferable and there is no guarantee that
• During PoS transactions, ensure that all relevant
the user will keep it secure.
details are correct before putting your PIN
number so that the card does not get declined • Do not immediately throw the charge transaction
(some banks make it applicable for international slip generated by an ATM; carry it with you and
transactions). throw it somewhere else. This will ensure that
scamsters/fraudsters do not misuse the details
• Use the debit card only on reputed websites, be
available in the slip.
it for using through the internet or through a
POS.
• Retain the transaction confirmation receipt after Banks have introdu+ced chip-enabled
using the debit card. credit/debit cards to enhance data security.
Customers need to contact their banks and
• Be sure to check the card statement and report
complete the formalities for exchanging their
immediately to your bank if you find any
old cards for the new chip-based debit cards.
transaction that is suspicious in nature or has not
been authorized by you.
• Keep the bank’s phone number handy in case of How to Report a Debit-Card Fraud?
a lost/stolen debit card so that the card can be A fraudulent online transaction in one’s bank
immediately blocked from misuse. account through debit-card use when the card is still
• Link your mobile number/email to your debit in their possession? Yes, that’s a real possibility and
card/bank account. can be done by fraudsters by means of email spoofing,
phishing or cloning your card. If that happens, here
are the steps for you to follow.

• Step 1
The moment you come to know that a suspicious
transaction has been done through your debit card (it
could be an SMS to your mobile at midnight), ask the
card issuer (either by ringing up the customer-care
number of the bank or by sending an email) to block
the card immediately.

• Step 2
Not Any of These, though
File a complaint in writing with the bank with the
• Do not click on the ‘save’ option for storing following documents:
card details and/or password, as it can become
accessible to accidental users. o Bank statement of your account

• Avoid using computers at cyber cafes or at any o Copy of the SMS received for the alleged
other public place for online transactions. transaction

• Do not respond to, or continue a call from, any o Copy of your ID proof and address proof as given
number that requires you to disclose card/account to the bank
details or any other vital information, as none o Copy of the police complaint (narrating the
of the banks would ring you up/send email for events) that you have filed with the local police
seeking such information. station
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In case the transaction was conducted through a a) Contributory fraud/negligence/deficiency lies on

phone app, furnish the screenshot of the information the part of the bank
and the location where it was downloaded. b) Third-party breach where the deficiency lies
neither with the bank nor with the customer
What if the police authorities refuse to but lies elsewhere in the system, and where the
lodge an FIR? customer notifies the bank within three working
Police authorities are obliged to accept days of receiving the communication from the
any complaint from any member of public bank regarding the unauthorized transaction
where she/he has been duped or has any
public grievance. In case the police refuse to • Limited liability
entertain lodging of a written complaint, the A customer shall be liable for the loss occurring
consumer has the right to approach the courts due to unauthorized transactions as under:
under Section 156 (3) of the Code of Criminal
a) Negligence by customer: Cases where the loss is
Procedure (CrPC). Aggrieved consumers can
due to negligence by a customer, such as where he
also lodge a complaint with the cyber cell, in
has shared the payment credentials, the customer
addition to lodging their complaint with the
will bear the entire loss until he reports the
police. The contact details of district cyber
unauthorized transaction to the bank. Any loss
cells specific to your place of residence are
occurring after the reporting of this unauthorized
available on the internet.
transaction shall be borne by the bank.
b) Delay in reporting or customer’s liability is not
Fraudulent Transactions and Liability of the proved: Cases where the responsibility for the
Cardholder unauthorized transaction lies neither with the
Reserve Bank of India, in its circular dated bank nor with the customer, but lies elsewhere in
06.07.2017, spelled out zero liability and limited the system, and where there is a delay (of 4 to 7
liability. working days after receiving the communication
from the bank) on the part of the customer in
• Zero liability notifying the bank of such a transaction, the per-
A customer’s entitlement to zero liability shall transaction liability of the customer shall be as
arise in the following events: delineated in the accompanying table.
CONSUMER VOICE JANUARY 2019 • 39
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BFSI

Type of Account Maximum

Liability (Rs)
Basic SB deposit accounts 5,000
All other SB accounts, prepaid
payment instruments and gift 10,000
cards, etc.
All other accounts and credit cards
(above particular limits) 25,000

Summary of Customer’s Liability

Time Taken for Customer’s Liability
Reporting Fraudulent (Rs)
Transaction
Within 3 working days 0
Shape of Things to Come?
Within 4–7 working The transaction value or
days the amount as mentioned • Mobile wallets will soon be linked to your bank
in the table below (on account so that there is a two-way funds transfer
maximum liability), between them (loading mobile wallets through
whichever is lower debit to bank account, and vice versa).
Beyond 7 working days As per bank’s board- • The quick response code (QR Code) is going to
approved policy be the future app for all payments in merchandise
purchases, as merchants accepting QR code will
have to shell out only Rs 50 (a PoS machine can
Reversal Timeline for Zero Liability/Limited set a merchant back by Rs 6,000 to Rs 10,000).
Liability of Customer • Plastic cards (credit/debit/ATM cards) may soon
• On being notified by a customer, the be replaced by Aadhaar-enabled payment systems
bank shall credit (or by reversal of debit) (AEPS) wherein all you will have to do is affix
the amount of unauthorized transaction your fingerprint(s) after feeding your Aadhaar
back to the customer’s account within 10 number to withdraw/conduct cash/transactions.
days without waiting for the settlement of • Some banks have already introduced the finger-
insurance claim, if any. The credit or reversal identified system in their in-house ATMs, though
of debit shall be value-dated so as not to cause on a smaller scale, which in future could be the
loss of bank interest to the customer on the norm for conducting ATM transactions.
transaction. Banks may also at their discretion
• Voice recognition may also become the future
decide to waive off any customer liability even in
norm in personal identification processes.
cases of customer negligence.
• Where the bank is unable to resolve the
complaint or determine the customer Takeaways
liability within 90 days, it will be liable to pay a) Choose a debit card that can be used globally
compensation (the like amount of the alleged if you are a frequent traveller abroad.
unauthorized transaction) to the customer. b) Choose one where there is no annual fee or a
• The customer is also entitled to no loss on minimum annual fee.
account of bank interest on the unauthorized c) Go for a debit card with a bank where there is
transaction (in case of debit cards). an effective grievance redressal mechanism.

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