The Reserve Bank of India (RBI) has extended the deadline for credit and debit card tokenization by three months until September 30, 2022. On Friday, in a press release, RBI mentioned that “to avoid disruptions and inconvenience to cardholders”, he decided to take this step.
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“This extended period can be used by the industry to (a) allow all stakeholders to be ready to process tokenized transactions; (b) process token-based transactions; (c) implement one or more alternative mechanisms to manage all post-transaction activities (including chargeback management and settlement) related to guest payment transactions, which currently involve/require the storage of CoF data by entities other than card issuers and card networks; and (d) educate the public about the process of creating tokens and using them to transact,” the regulator said.
RBI, while encouraging cardholders to tokenize their cards for their own security, mentioned that the tokenization process was going well. Till date, a total of 19.5 crore tokens have been created. Cardholders can choose to create tokens if they wish. The ability to manually enter card details at the time of transaction is available for those who do not wish to create a token.
A number of entities, including merchants in an online payment chain, store card data such as card numbers and expiration dates – Card-on-File (CoF) – citing convenience and convenience for cardholders. While this practice is convenient, the availability of card details with multiple entities increases the risk of theft or misuse of card data.
“There have been instances where this data stored by merchants has been compromised. Because many jurisdictions do not require an Additional Authentication Factor (AFA) to authenticate card transactions, data stolen from the hands of fraudsters can lead to unauthorized transactions and monetary loss for cardholders” , the RBI said.
Through tokenization, card details are replaced with a unique code or token, allowing online shopping to continue without revealing sensitive card information, the RBI said.
(Edited by : Priyanka Deshpande)
First post: STI