Is Tokenisation mandatory for consumers from October 1? | The Financial Express

Is Tokenisation mandatory for consumers from October 1?

Tokenisation, a process where unique single-use tokens replace sensitive card data, has recently been mandated by the Reserve Bank of India to control the growing menace of online fraud and cyberattacks.

Is Tokenisation mandatory for consumers from October 1?
Tokenisation is a process where the credit/debit card data, typically shared with merchants, is deleted and replaced with unique, encrypted tokens.

The adoption of digital banking has seen a meteoric rise over the last few years. However, this has also resulted in an equally concerning rise in online scams. Tokenisation, a process where unique single-use tokens replace sensitive card data, has recently been mandated by the Reserve Bank of India to control the growing menace of online fraud and cyberattacks.

Let’s understand what tokenisation is and how it can affect your digital payments.

Why Tokenisation?

Online transactions require customers to save their card details on the merchant’s platform, exposing them to the risk of misuse. Tokenisation is a process where the credit/debit card data, typically shared with merchants, is deleted and replaced with unique, encrypted tokens. The generated tokens will be unique for every card-based transaction with a single merchant. This will make online transactions safer and reduce check-out times for customers who will no longer be required to re-enter their card details for every transaction.

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Tokenising your card

Tokenising your debit or credit card is a quick and easy process. When making an online purchase, once you reach the payment page of the merchant’s website, provide your card details. Select the ‘Secure your card’ option, which will be displayed after you have entered your card details. Finally, enter the OTP when prompted to tokenise your card information. Once your card is tokenised, the merchant’s payment page will display only the last four digits of your card for future transactions. Currently, there are no charges levied to tokenise your card.

Making transactions quicker and safer

Tokenisation substitutes the user’s sensitive card data with a unique digital token, thus adding a layer of security to online transactions. It also helps save time during checkout as the digital token eliminates the requirement of having to enter card details for every transaction.

Is tokenisation mandatory?

According to the RBI, tokenisation is currently not mandatory. Customers can choose whether or not to tokenise their cards. If you don’t wish to tokenise your card, you will have to enter your details manually for each future transaction.

With its many advantages, tokenisation is all set to transform the online payment landscape in India while also fortifying the case for adopting digital forms of payment.

(The author is CEO, BankBazaar.com)

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