The Reserve Bank of India (RBI) has made it mandatory for Tokenisation of all credit and debit card data used in online, point-of-sale, and in-app transactions.
What is tokenisation? As per the RBI, tokenisation refers to the replacement of actual card details with an alternate code called the "token".
A tokenised card transaction is considered secure as the actual card details are not shared with the merchant during transaction processing.
This adds some extra layer of security through tokenization which is expected to improve users' digital payment experience.
RBI has set a deadline of September 30 this year to replace all credit and debit card data with unique tokens.
The deadline was extended by three months starting from July so that the additional period can be ....
utilized by the industry to facilitate all stakeholders to be ready to conduct tokenized transactions.
Tokenization can be performed only by authorized card networks and the list of authorized entities is available on the RBI website.
The customer need not pay any charges for availing of this service. On June 24, RBI said about 19.5 crore tokens were created.
Tokenisation of Credit and Debit card is not mandatory for all customers, they can choose whether to tokenize their card or not.
Tokenisation has been allowed through mobile phones and/or tablets for all use cases/channels (e.g., contactless card transactions, payments through QR codes, apps etc.)
Those who do not wish to generate tokens can continue to transact as before by manually entering the card details while making the transaction.