Starting January 1, 2022, sensitive credit or debit card information such as card number CVV and expiry date cannot be stored by merchants while processing online transactions. The country’s apex bank Reserve Bank of India has directed all sellers in India such as Amazon, Flipkart and Zomato to delete card information stored earlier to enhance the security of online transactions. The regulator has allowed card networks like Visa, Mastercard or RuPay to issue tokens on request on behalf of the card-issuing banks or companies. This new system, called tokenisation, will be safer as actual card details will not be allowed to be stored by the merchants thereby reducing the possibility of data theft and fraud. However, success of this scheme will depend on the preparedness of the merchants.
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What is tokenisation of credit and debit cards
Card tokenisation is a process by which card details are replaced by a unique code or token, allowing purchases to go through without exposing sensitive details.
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Is this a new concept
No, it already exists in India. United Payment Interface (UPI) uses the tokenisation concept, making it one of the safest online payment systems.
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Who will benefit from tokenisation of credit and debit cards
The tokenisation of cards aims to benefit the consumers who use online payments. This will make online payments safer. RBI has told merchants to create a ‘token reference number’ against each token. Only these reference numbers are stored by the merchants. Once a fraud is detected, the same token cannot be used again. Users will have to request for a new token.
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What about international transactions
Tokenisation is only for domestic transactions.
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Do consumers need to remember their token info
Tokens will also be 16-digit numbers like in case of credit or debit cards, but consumers do not have to remember these. In fact, they won’t even get to know their token details.
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Who will issue the tokens?
Card networks — Visa, Mastercard or RuPay — will issue tokens and will inform card-issuing banks. Some banks may ask card networks to take approval before issuing tokens.
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Will there be one token for all merchants
No. Tokens will be unique for a combination of card and merchant. If a consumer has a single card but makes online purchases from three different merchants, three different tokens to be issued. That means tokens will be merchant specific.
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What will happen if tokens are not available
Customers will have to enter card details every time they shop.
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Can I delete my token and who will manage tokenised cards
Banks will create a portal for card holders. Card holders can also delete tokens.
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What are the challenges
Not many users are aware of tokenisation and how it will work. These are also apprehensions that this may reduce online card payments volume and may give fillip to wallet payments.
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