15/04/2024
Tokens and tokenization are terms that have recently been used about a lot. To facilitate and authenticate transactions, the Reserve Bank of India introduced CoF (card on file) tokenization guidelines, which entail replacing actual card data with encrypted digital tokens. RBI had given the Payment Aggregators and Payment Gateways a deadline till31st December, which has now been extended till 30th June, 2022.
What is Tokenization?
Tokenization is the process of replacing sensitive data with one-of-a-kind identification symbols that retains all the essential information without jeopardising its security.
As a result, beginning July 1, 2022, using credit or debit cards while shopping on any online platform, such as Amazon, Flipkart, and others, will change. On the website, cardholders will not need to save their 16-digit card number or the card’s expiration date.
The RBI stated in March 2020 that payment aggregators must not keep user card information. As a result, the RBI has permitted card issuers to serve as Token Service Providers (TSPs). This will be made possible by consumer agreement and will necessitate the use of an “Additional Factor of Authentication (AFA).” Because the card is turned into a unique ‘token’ that permits the payment, the entities engaged in the transaction do not have to memorise the card details on either end.
Tokenization has no direct impact on the payment process or the consumer experience, but it does give an extra layer of protection to the transactions. It ensures that a user’s sensitive information stays with them as they transact, eliminating any risks associated with data vulnerability.
The impact of the June 30, 2022deadline
The RBI has enforced tokenization for merchants rather than customers. Individuals will still have the option of opting out of having their cards tokenized. If a consumer does not select to tokenize their card, they will be required to enter their complete card number, CVV, and other information every time they make an online or mobile transaction, making the procedure laborious and time-consuming. Because the RBI has directed that all card details previously saved with merchants be deleted.
Visa is the first card issuer to introduce CoF Tokenisation
Visa said on October 6 that it has begun offering Card-on-File (CoF) Tokenization services in India, in accordance with newly established RBI standards.
Visa is the first card issuer to introduce CoF Tokenization in India, ahead of June 30 deadline for the Reserve Bank of India’s (RBI) guidelines for Payment Aggregators (PG) and Payment Gateways.
According to Visa, the service is now available for clients on platforms such as Grofers, BigBasket, and MakeMyTrip, and was developed in collaboration with payment solutions provider Juspay.