TR Ramachandran, Group Country Manager, India and South Asia, Visa, said, “This will be critical in building consumer trust on merchant platforms and reassure them of the safety of their payment credentials on these platforms. We have enabled all our banking partners for tokenization and continue to work closely with merchants, payment aggregators and gateways to ready the ecosystem for CoF tokenization rollout.”
What is tokenisation?
Tokenisation is the process of replacing the 16-digit payment card account number with a unique digital identifier known as a ‘token’ for mobile and online transactions. This token then allows payments to be processed without giving away the cardholder’s account details.
According to the RBI’s FAQs, “Tokenisation refers to replacement of actual card details with an alternate code called the “token”, which shall be unique for a combination of card, token requestor (i.e. the entity which accepts request from the customer for tokenisation of a card and passes it on to the card network to issue a corresponding token) and device (referred hereafter as “identified device”).”
Benefits of tokenisation
The central bank FAQs states that a tokenised card transaction is considered safer as the actual card details are not shared with the merchant during transaction processing.
Click here to listen to ET Wealth’s podcast on: What debit, credit card users should know about tokenisation
The RBI’s CoF tokenization guidelines, issued in August, mandate replacing the actual card data with encrypted digital tokens, which are then used to facilitate and authenticate transactions. “This devaluation of sensitive card details alleviates risk and reduces vulnerability of sensitive data, as only tokens are present in transit, across the ‘in-rest’ and ‘in-use’ phases. These new guidelines are expected to enhance consumer trust in ecommerce payments, ensure seamless transaction experience as well allow card issuers the comfort of authorising a higher number of transactions,” stated the Visa release.
RBI’s consent for card-on-file tokenisation by card networks for transactions on mobile phones, tablets, laptops/desktops, wearables, IoT devices etc. is aimed at making card-based digital payments more secure and frictionless. “These new guidelines come at a time when Indian consumers continue to adopt digital payment methods for daily and discretionary needs. CoF tokenization ensures more control, visibility and a consequently smoother transaction experience, along with high payment success rates,” stated the Visa press release.
Through a press release issued on September 7, 2021, the RBI stated, ” It may be noted that introduction of CoFT, while improving customer data security, will offer customers the same degree of convenience as now. Contrary to some concerns expressed in certain sections of the media, there would be no requirement to input card details for every transaction under the tokenisation arrangement. The efforts of Reserve Bank to deepen digital payments in India and make such payments safe and efficient shall continue.”
