In order to make online payment transactions via credit and debit cards more secure and reliable, the Reserve Bank of India (RBI) has ordered all online payment gateways, merchants and e-commerce companies to tokenize their customers when making payments.
The Central Bank has asked all merchants and e-commerce companies to delete all sensitive data related to customer card details provided on its platform.
According to the new rules that take effect on January 1, 2022, all merchants are required to use encrypted tokens for transactions instead of credit and debit cards. January 22! The HDFC bank card details you saved on the merchant’s website/application will be deleted by the merchant in accordance with RBI requirements to enhance the card’s security. To pay each time, enter the full card details or choose tokenization. “
What is tokenization?
Tokenization refers to the replacement of credit and debit card details with an alternative code called a “token”, which is important for the card and the token requestor (the entity that accepts the tokenization request of the card from the customer and passes it) The combination is the only RBI said, to the card network to issue tokens) and equipment.
This reduces the chance of fraud due to sharing card details. The token is used to perform contactless card transactions on point-of-sale (PoS) terminals and QR code payments.
RBI has also extended the tokenization of Card-on-File (CoF) transactions-card details used to be stored by merchants-and instructed merchants not to store card details in their systems starting January 1, 2022.
A CoF transaction is a transaction in which a cardholder authorizes a merchant to store his or her MasterCard or Visa payment details and bill the stored account. E-commerce companies, airlines, and supermarket chains often store card details.
Will it affect the online transactions of merchants?
As thousands of stakeholders have not yet joined the tokenization platform, and “entities regulated by RBI are not yet ready for new initiatives”, digital payment companies and merchant institutions have requested RBI to extend the implementation period of tokenization rules. They stated in a letter to the Reserve Bank of India that if implemented in the current state of preparation, the new authorization may cause significant disruption and loss of revenue, especially for merchants.
The Business Payments Alliance of India (MPAI) and the Digital India Foundation Alliance (ADIF) stated in a joint letter: “This type of destruction weakens the trust in digital payments and makes consumers accustomed to switching to cash payments.” Expressed concerns about RBI’s industry readiness for the CoF directive and urged the central bank to extend the December 31st deadline for implementing card data storage specifications. Sources said that some banks also wrote to the Reserve Bank of India, seeking to extend the implementation time of the new regulations.
Complete News Source : The IndianEXPRESS
