Online merchants can lose up to 40% of their income after December 31 due to tokenization of user card information | Today Headlines

Online merchants can lose up to 40% of their income after December 31 due to tokenization of user card information

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Online merchants can lose up to 20-40% of their income after December 31, after which merchants will no longer be able to store users’ card information and will have to replace each card number with a random token number, a declared Wednesday the industrial organization CII. .

This was highlighted during a virtual session on “Digital Payments and the Media Consumer in India” which was hosted by CII’s Media and Entertainment Committee.

The purpose of the session was to highlight the issues consumers would face starting next year due to the RBI’s Dec.31 deadline for tokenization, CII said in a statement.

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This means that from January 1, merchants will no longer be able to store users’ card information and will have to replace each card number with a random token number, he added.

“Online merchants can lose up to 20 to 40% of their income after December 31, and for many of them, especially the smaller ones, it would spell the end, forcing them to close shop,” he said. he added.

Sijo Kuruvilla George, executive director of the Alliance of Digital India Foundation (ADIF), said traders will lose out in this process through no fault of their own and cannot build tokenization infrastructure under the rules. of the RBI.

Technology integration, lost revenue and customer education were squarely on the merchant, and they didn’t have time to do it all due to a lack of upfront preparation or commitment to it. said George. India has around 98.5 crore of cards, which are used for around 1.5 crore in daily transactions worth Rs 4,000 crore, CII said.

The value of India’s digital payments industry in 2020-2021, according to the RBI’s annual report, was Rs 14,14,85,173 crore, he said, adding that digital payments had triggered and sustained the economic growth, especially during difficult times of the pandemic. .

While the intention of the Reserve Bank of India (RBI) is to protect the interests of consumers, the challenge on the ground is about implementation, he added.

In order for a tokenization solution to be consumer ready (i.e. for consumers to be able to transact successfully using tokens instead of their card information), the solution would need to have gone through three steps , did he declare. The steps include sourcing and processing tokens and scaling for multiple use cases.

“However, India is far from having completed these three steps, and rushing with tokenization without proper preparation of the system is going to have a negative impact on transactions,” he said.

(Edited by : Jomy Jos Pullokaran)

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Online merchants can lose up to 40% of their income after December 31 due to tokenization of user card information

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