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Economy
Mahesh

02/10/22 08:50 AM IST

Card Tokenization

In News 
  • The tokenization of card-based payments will be implemented from October 1, 2022.
Card Tokenization 
  • Around 35 crore tokens have already been created and in September, about 40 per cent of transactions were undertaken using tokens, at a total value of Rs.63 crores.
  • The RBI required all merchants to delete the customer debit and credit card details before October 1 and replace the card payments with unique tokens.
  • It mandates masking all sensitive details like 16-digit card numbers, names, expiry dates, and codes with a unique card number called token.
  • This rule is applicable to all stakeholders except card issuers and card networks.
  • Under these rules, the central bank has permitted authorized card payment networks to offer card tokenization services to consumers requesting it.
  • After December 31, 2022, it will be impossible to store card details, except by card networks and card issuers
Tokenization 
  • Tokenization is the process of replacing card details with a unique code or token, allowing the individuals to purchase online without exposing sensitive card details.
  • Token is a randomly generated unique placeholder obtained from the company’s internal network.
  • It is used to access, retrieve and maintain a customer’s credit and debit card details.
  • It is used when recurring payments are made or when merchants store card information to speed up checkouts.
  • It ensures improved safety and security of card transactions. Often times, debit and credit card information are exposed on merchant website during hacking incidents.
  • Card tokenization will help address this issue. It allows customers to save digital copy of their cards on their smartphones.
Source- Live Mint 

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