The Reserve Bank of India (RBI) has introduced a new method, tokenization, which will allow customers to transact online without recording DEBIT OR CREDIT card details. The method was supposed to be effective from January 1, 2022, but given the interest of debit and credit card holders, RBI decided to extend the implementation of tokenization until July 1, 2022.
This new payment method was mainly introduced to guarantee the fluidity of transactions without exposing confidential customer data. After tokenization, details like debit or credit card number, CVV number and expiration date will no longer be needed for digital payments.
A step to ensure better security
As digital financial frauds are on the rise, the fear of falling prey to financial frauds is a growing concern among customers. Tokenization protects businesses from the negative financial impact of data theft, because even in the event of a breach, the merchant would not have important data that could be stolen. While tokenization cannot protect your business against an information and data breach, it can reduce the risk of a possible breach.
âFrom secure point-of-sale (POS) in-store transactions to on-the-go payments, from conventional e-commerce to another era of integrated payments, tokenization makes paying with gadgets easier and more secure than at any other time, âAkash Sinha, CEO and co-founder of Cashfree Payments, a payment platform used by businesses to make bulk payments, told Outlook Money.
The tokenization solution will essentially replace all of a debit and credit cardholder’s information with a randomly generated number called a âtokenâ. A two-factor authentication method based on OTP as well as cryptograms unique to each transaction will be used so that the same token cannot be used on other merchant platforms. The cryptogram is a method to ensure better security where details / information are encoded on encrypted texts. (Read more here.)
Owners of various fintech platforms believe that this move will not only provide better security for customers, but also improve SMOOTHEN? the transaction process for e-commerce sites and digital platforms. âThis will be a turnkey solution for businesses, allowing their end customers to continue to enjoy the convenience of recorded card transactions with added security. We strive to enable companies to fully understand why this change is the need of the hour and how they can navigate through the first few weeks of the startup tenure, âadds Shashank Kumar, co-founder of Razorpay, a digital company. payment software.