Bank Cards, Banking, Credit Card, Debit Card

RBI card tokenization to secure digital payment

Posted By: Admin
October 1, 2022 |

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RBI card tokenization: The latest news and Reserve Bank of India (RBI) mandate, is debit and credit cards tokenization. RBI has taken steps to secure customers’ debit and credit cards sensitive data like expiry date, CVV, card number etc. The tokenization will also help to transact more efficiently with disclosing your secret financial details as well as without giving a scope to scammers to steal your data. In this article we will discuss all necessary information about tokenization.

Table of content.

What is card tokenization?
Is it mandatory to tokenize your bank card?
How will tokenization secure your bank card?
Impact of tokenization
How to tokenize your card?
How much fee you need to pay for tokenization of cards
What experts say about tokenization?

What is RBI card tokenization?

Tokenization is the process of replacing original card details with an alternative code called a “token”. The token will be unique and provides an additional protection for customer card details. The tokenization of the card will replace sensitive payment credentials, such as 16-digit card numbers, names, expiry dates, and CVV, with a unique alternate token. The token will be a unique combination of card, token requestor and device.

The tokenization request registration will be done only with explicit customer consent through Additional Factor of Authentication (AFA). Token requesters cannot do it by way of a forced / default / automatic selection of checkbox, radio button, etc.

Who is the token requester?

Token requester is the entity which accepts a request from the customer for card tokenization and passes it on to the card network to issue a corresponding token.

Is it mandatory to tokenize your card?

No, at present RBI has not made it mandatory to tokenize your cards. It is the customer’s decision to choose the tokenization of the card or not to tokenize his/her card. A customer can continue to transact by entering card details manually at the time of initiating the transaction if he/she does not tokenize the card.

However, if you had saved card information on any retailer websites or applications, the merchant will remove the information before 1 October 2022. You will need to enter entire card information each time you make a purchase.

How will tokenization secure your card?

Generally, authorized card networks save your actual card data and other relevant details in a secure mode by the . In case their security measures are not good, it puts all customers at risk. In case of website hack and debit and credit card details leak, customers may get into trouble.

After tokenization of a card, token requestors cannot store Primary Account Number (PAN), card number, or any other card detail.

Neither the Payment Aggregators (PAs) nor the Merchants can store customer card credentials within their database w.e.f. October 01, 2022. Token requestor will be certified for safety and security that conform to international best practices / globally accepted standards. It will be safer to transact when the merchants will not save actual card data.

Impact of RBI Card Tokenization

There will be many positive impacts of RBI card tokenization. We have mentioned some views of experts below –

Tokenization will speed up customers’ digital shopping experiences while also boosting security and lowering hassle in the checkout process
You can use the token for any subsequent payments on the online merchant app or website after issuance of token.
Tokenized card transactions will be safer.
All credit and debit card information used for online, point-of-sale, and in-app transactions will be replaced with independent tokens.

How to tokenize your card? Steps for card tokenization

Once a customer requests card tokenization every merchant needs to follow the below process for each transaction separately.

Customers need to enter required details after selecting card options as the payment method.
On the shopping website there will be an option ‘secure your card as per RBI guidelines’. Customers must opt for this option to generate a token and have it stored.
Now customers will receive a one-time password (OTP) on the mobile device or email from the card issuer company.
After entering OTP on the bank page, the card details will be sent for token generation as well as transaction authorization.
The Generated token will be sent back to the merchant, who then stores the token against the customer identification data if you opt for storage of the token.

Next time, when a customer visits the same website, It will show you the last four digits of the saved card to recognize it.
A new token will be generated for every merchant website where the card details are required to be stored.

How much fee do you need to pay for RBI card tokenization?

As the tokenization process is initiated by RBI and mandatory to all the merchants and websites who secure card details, tokenization is free from any kind of fee, which means there is no charge to tokenize card. The RBI has clearly instructed all banks, websites, e-commerce apps not to charge any amount from customers.

What experts say about card tokenization?

Industry experts in India have positive views on tokenization of cards. Some of the experts comments we are sharing below –

Dewang Neralla, CEO (chief executive officer) NTT Data Payment Services India – “Tokenization is used for recurring payments or in cases, where merchants have stored the card details for providing a faster checkout experience. It’s a very simple process to tokenize your card”
Tanya Naik, Head of Omnichannel, Pine Labs – “With the rising adoption of digital payments, it is encouraging to see the regulator taking steps to enhance the payments security. Tokenization not only aids in making the payment transaction experience more secure for the end user but also aids merchants in delivering a consistent user experience and higher transaction approval rates with speed and security.”
Kotak Mahindra Bank – “Tokenization is a backend process of replacing Credit/ Debit/ Prepaid Card details with a unique set of characters or a ‘token’. This will secure payments and enable future transactions without exposing any sensitive card details.”

Do you need to remember token details?

No. Merchants can save token details with permission of customers. You will have to just check the last four digits of the saved cards to make the payment again.

Important Link

https://m.rbi.org.in/scripts/FAQView.aspx?Id=129

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