What is Tokenisation of debit and credit cards?

Published: Published Date – 02:55 PM, Wed – 27 July 22

Hyderabad: On July 24, the Reserve Bank of India (RBI) extended the deadline for credit and debit card tokenization by three months, to September 30, from the previous deadline of June 30. The RBI has directed payment aggregators, wallets, and online merchants ( other than card issuers / card networks) not to store any sensitive card-related customer information, including full card details. As a result, the card numbers can be replaced with a ‘token’.

The RBI mandate would take effect on October 1, 2022. According to the RBI, this development will make credit card transactions more secure.

Read along to understand more about Tokenisation and RBI guidelines:

What is Tokenisation?

Tokenisation is the process of replacing a card’s 16-digit number on the plastic card with a unique alternate card number, or ‘Token’ which shall be unique for a combination of card, token requestor and device. Tokens can be used for online transactions, mobile point-of-sale transactions or in-app transactions. This token contains no personal information that can be directly accessed and keeps changing making it the most secure method to complete payments.

Here’s how to generate your token

The tokenisation process is free of charge and is applicable only for domestic card transactions. If you have multiple cards, you can create separate tokens for each card you own.

Step 1 – Visit any e-commerce / merchant website to make a purchase and start a transaction

Step 2 – During the check-out, select your preferred bank’s credit / debit card as payment method and enter all details

Step 3 – Select the option to “secure your card” or “save card as per RBI guidelines”

Step 4 – Fill in the OTP sent on your mobile or email by the card company and finish the transaction

Step 5 – Your token has been generated and saved instead of your actual card details

You can recognize the card by its last four digits and use the same token for that website for any future transaction.

Benefits of tokenisation

Tokenisation is intended to combat online fraud and prevent digital payment breaches. According to the central bank, many entities in the card payment transaction chain store actual card details. In fact, some merchants require their customers to save their credit card information. The availability of such information with a large number of merchants significantly increases the risk of card data theft.

Tokenisation aims to eliminate this by replacing actual cardholder information with a unique and randomly generated code on merchant websites.

What if I don’t tokenise my cards?

A card user does not need to use the token system mandatorily. If the customer chooses not to use tokens, they will be required to enter their card details manually every time they conduct a card transaction on an e-commerce / merchant website.


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