Explained: As RBI¡¯s June 30 Deadline Nears, Here¡¯s What You Need To Know & Do About Card Tokenization
Before the 30th June 2022 deadline set by RBI, card users need to opt for tokenization in order to prevent the inconvenience of entering your card's details like card number, expiry date etc each and every time you do an online transaction with merchants on websites or apps.
In the past two years, RBI has rolled out multiple circulars barring authorized payment aggregators (PAs) as well as the merchants on-boarded by them from storing customer card credentials within their database or server.
In December 2021, it had given January 1, 2022, as the deadline for the same, but later extended it to June 30, 2022. Now, with this deadline barely three weeks away, it's time for card users to act quickly.
After June 30, 2022, any sensitive data on consumers' cards will reportedly be purged, as per RBI.
All the associated entities, including entities in the card transaction/payment chain, other than the card issuers and/or card network, have been asked by the RBI to instead use encrypted tokens to carry transactions.
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Why This Move?
As per RBI, some merchants tend to force their customers to store card details online with them. Availability of such details with a large number of merchants substantially increases the risk of card data being stolen. So, when your card details are saved in an encrypted manner through tokenization, the risk of fraud or compromised data gets reduced to a great extent.
What Card Users Need To Do Now?
If you don't opt for tokenization, you would have to manually enter the card details like card number, expiry etc every time to make each online payment.
Want to avoid that fuss? Get the tokenization of card data done.
Tokenization refers to the replacement of actual card details with a unique alternate code called a token, which is unique for each combination of card, device and token requester.
Explicit customer consent requiring Additional Factor of Authentication (AFA) will be required for the same. Simply put, the merchant would ask for your consent to tokenize the card. Once you give your consent, the merchant sends a tokenization request to the card network, which then creates a token as a proxy to the card number and sends it back to the merchant.
One token is limited to just one card and one merchant. In case of multiple cards, each will have to be tokenized separately.
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Also Read: Attention! RBI Announces New Guidelines For Debit & Credit Cards Effective From July 1st 2022
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