Credit and ATM card users: Seeing the increasing benefits and trend of card tokenization in online transactions, the Reserve Bank has now decided to make this facility faster and more secure. According to a recently released statement, the Reserve Bank has proposed to take the Card on File Tokenization Creation Facility directly to the bank level. Know how this new step will make shopping easier for you
Know about tokenization
Earlier, if you had to buy goods from any e-commerce website, you had to fill the details of your cards, which not only took time but there was also a risk of details being stolen. The Reserve Bank has decided that from October 1, 2022, no online merchant or payment aggregator or wallet can store any customer’s information, in such a situation the idea of token was given to complete the transaction. In this, your card details are converted into a code number i.e. token and then you can complete the purchase using this token. This code number will remain with the merchant and your card information will remain safe.
What has changed now?
Till now tokens could be generated through merchant websites. This made the process quite safe but there was a problem with it. Because customers use more than one platform and pay with more than one card, a token has to be generated for each card on each platform on the first use.
However, the Reserve Bank has proposed to generate tokens at the bank level under the new rules. This means that now people can generate one token for any one card and can use this token at all merchants. Under the process, the customer will first send a request to the card issuing bank to generate a token for the card. The bank will generate a token for the card after investigation and verification from its side. Customers will use this token on the platform for transactions. To complete the transaction, the merchant will send this token to the concerned bank and the bank will complete the transaction using the card details given for the token.
