The RBI has propounded to further streamline the process of online payments through Debit or Credit Cards.
Key Highlights
- RBI has proposed to add a new channel for Card Tokenization for Debit Cards and Credit Cards.
- Cardholders can now get their Card tokenized directly at the card issuer’s facility.
- Currently, the request for Card Tokenization is routed through Token Requestors.
The Reserve Bank of India (RBI) in a press release revealed that the regulator is now aiming to smoothen the process of online payments made through Debit Cards and Credit Cards.
The Central Bank has proposed to introduce new channels for ‘Card-on-File Tokenisation’ or Card Tokenization.
The option for Card Tokenization may soon be available directly at the issuer bank itself, instead of the request for tokenization being routed through e-commerce platforms while making any purchase.
Earlier, the RBI had made Card Tokenization mandatory for online platforms that stored the Credit Card or Debit Card details of customers.
Given the success of the acceptance of the rule and the benefits associated with Card Tokenization, the RBI has decided to add the new avenue for tokenization. This, the Central Bank believes, would lead to more convenience for Cardholders.
Card Tokenization is the replacement of the actual details of the card, with a unique code or ‘token’ generated by the Card Network that can be stored by online platforms (payment wallets, e-commerce platforms, aggregators, etc.) for transactions on the platform.
A Card token is device-specific and thus, there could exist multiple tokens for a Card to be used through multiple devices.
How does Card Tokenization work?
Currently, the request for Card Tokenization to the bank gets routed through the e-commerce platform/online merchants, payment wallets, etc. known as Token requestors.
The online platform, known as the ‘Token Requestor’ sends a request to the Card Network for tokenization, which then seeks the cardholder’s consent and tokenizes the Card.
The token is then shared with the online platform through which the request for tokenization was routed, which can be stored by the platform for subsequent transactions.
With the proposed change, cardholders may soon be able to initiate the request for tokenization directly on the app or web portal of the Card issuer, further concretising the control of users over their details.
