Indian banks racing ahead of their British counterparts

As British banks continue to dither with virtual cards and two-factor authentication in the face of a tsunami of fraud, I was intrigued to see a documentary on bank/card fraud - with English sub-titles - whilst round at an Asian pal's house on (Indian) satellite TV at the weekend.

Based on what I learned from the documentary, it looks Indian banks are racing ahead of their British counterparts in the battle against card fraud.

Almost all Indian banks are now in the process of issuing two-factor authentication devices to their online banking customers, as well as issuing virtual card numbers for use online.

HDFC Bank, for example, has introduced a virtual card called Netsafe - a temporary card that can be created online and used for a single transaction up to a specific value.

Each pre-loaded Netsafe v-debit card has a time validity of just 24 hours and, if the balance isn't used, the dosh is pushed straight back into the account holder's regular account.

ICICI Bank, meanwhile, is now printing v-card details on the card carriers mailed out to credit and debit card holders.

The IO Card (Internet Only Card) has a maximum credit limit of 10,000 Rupees and can only be used online. In the event of fraud, the cardholder is indemnified, no matter what.

ICICI isn't saying, but the tone of the documentary suggests that the bank is applying stringent anti-fraud controls on the card - if a transaction looks at all dodgy, the bank says it won't authorise the charge to the card.

According to Visa Asia, however, fraud is not a major problem in India, with losses due to fraud of all types less than one per cent of the value of transactions processed.

To put this figure in context, Visa claims that e-ticketing saves airlines around six per cent of their operating costs, so even if the airline has to pay 1.0 per cent extra to the card processing company, it's still ahead overall...