The Merchant Payments Alliance of India (MPAI) and the Alliance of Digital India Foundation (ADIF) have jointly expressed concerns about industry readiness in response to the recent RBI directive on card-on-file tokenization (CoF) and have written to the Central Bank requesting an extension of the December 31 deadline for implementing card data storage norms.
“Merchants cannot start the testing and certification of their payment processing systems until banks, card networks, and PA/PGs are certified and live with stable APIs for consumer-ready solutions,” the joint letter noted.
The two organisations have sought a phased introduction of the new mandate, a minimum time period of six months for merchants to comply following the preparedness of banks, card networks, and payment aggregators/payment gateways, as well as more consumer awareness about the policy change.
MPAI and ADIF believe that if implemented in its present state of readiness, the new RBI mandate could cause major disruptions and loss of revenue, especially for merchants. According to the letter, “Disruptions of this nature erode trust in digital payments and reverse consumer habits back towards cash-based payments.”
According to Sijo Kuruvilla George, Executive Director, Alliance of Digital India Foundation, “In the scenario that banks are lax on preparedness, the brunt of that will be borne by merchants in the form of loss of revenue – we are looking at revenue losses of anywhere between 20-40% at the minimum should that be the case. It’s also important to note that it’s only after the readiness of banks, card networks, and APIs are made available that merchants are even able to take effective measures on their part to comply.”
According to Vishal Mehta, Chair of the Governing Council of the MPAI, “This unpreparedness will impact recent digital payments adopters even deeply. The frequency and intensity of phishing attempts will increase as entire card details are to be entered for each transaction, causing a significant increase in irreversible fraudulent transactions.”