Amazon, Uber, Swiggy & Others Banned From Storing Card Details, Only Tokens Allowed: How Will It Work? (Tokenization Guide)

Indian digital payments ecosystem is witnessing a huge overhaul in recent years. UPI payments are increasing every month with various players pushing for it. Now even WhatsApp is also pushing for payments using UPI in it. And as the year 2021 is coming to close, we are at the brink of another milestone in the Indian digital payments ecosystem.

Now, you won’t require to save your 16-digit card number and the card expiry date on the merchant’s website. As per the new rules set by the Reserve Bank of India (RBI), now ‘tokenization’ will replace this age-old practice of saving your card details on merchant websites. Now let’s have a look at the nitty-gritty of this new fancy term called tokenization.

RBI mandates Tokenisation from 1st January 2021

Normally, whenever we shop online, we tend to save your card details on the merchant website for future use. This saves us from the trouble of requiring to enter the card details repeatedly. But by saving your details on the merchant website, you are also making your card details vulnerable to theft.

This is where the part of Tokenisation comes in. By this process, your card details are converted into a unique token that is specific to your card and only to one merchant at a time. And this code masks the true details of your card, no one can misuse your card. This token can be saved on the online portal’s server.

Now, from the upcoming new year 2022, as per the mandate by RBI, not a single merchant will be able to save your card details. So, now either you make a token before placing any purchase order or enter your card details every time you buy stuff off the internet.

How does this card tokenization work?

Whenever you will be checking out from any online shopping portal, you will have to enter your card details and opt for tokenization. Your merchant will forward it to the respective bank or the card networks (VISA, Rupay, Mastercard, etc). A token will be generated and sent back to your merchant, which then saves it for you. Now, the next time you come back to the shop, just select this saved token at check-out time. You will see the same masked card details and the last four digits of your card number. You will need to enter your CVV and complete the transaction.

It should be noted that Tokenisation is not mandatory, but it makes it easier to shop repeatedly.

It should be noted that one token is limited to just one card and one merchant (online portal). For example, if you have, say, an HDFC credit card tokenized on Flipkart, then, this same card will have a different token on Snapdeal. However, as a customer, you don’t need to know or remember the token linked with the card. You can tokenize multiple cards with the same merchant, or tokenize the same card with multiple merchants.