The Reserve Bank of India has recently allowed tokenization of debit, credit and prepaid card transactions to enhance the safety of the digital payments ecosystem in the country, says a report in Banking Frontiers. By tokenization, the card details will be masked while a transaction is processed at point of sales, QR codes and other payment modes. The measure will allow card operators to issue tokens for third party payment applications as well. Mastercard has already introduced tokenization in India and Harveer Singh, director of Market Product Management for South Asia at Mastercard, explains that with token services, consumers can store their card credentials with a merchant or retailer without the risk of exposing actual card account details. This, he says, adds another layer of security to online transactions without removing the convenience and at the same time prevents service disruptions with a consumer’s favorite merchants by automatically updating card credentials should a card expire or need replacement.
Harveer Singh emphasizes that tokenization provides an excellent opportunity for banks to make their customers’ lives easier as it provides the security of a physical EMV chip and applies it to non-card environments, including mobile and internet payments, mobile PoS transactions, proximity payments and in-app purchases, etc. “By doing so, it eliminates a major hassle factor for consumers and offers them the choice and peace of mind to make secure digital payments from a variety of connected devices,” says he.
He points out that through the 8 January 2019 notification, the Reserve Bank of India has defined the regulatory framework for tokenization of debit, credit and prepaid card transactions. This will spur wider adoption of tokenization in the Indian payments ecosystem, including the launch of additional device-based payment services (digital wallets).
