Online Payments By Debit/Credit Card Will Change From July 1st: Find Out The Critical Details
From July 1 onwards, Indian customers online will have to either enter their card details every time they make a payment or make use of tokens to complete transactions.
The new norm
The RBI will begin the implementation of the card tokenization rule according to which a customer who does not tokenize their debit or credit card will have to enter the details every time they make a payment online.
RBI had issued the tokenization guidelines whereby merchants were prohibited from storing the data of customers’ cards on their servers.
Purpose of the change
The rule was made in order to protect and secure customer data.
It will also contribute to the growth of digital transactions as the trust in online payments grows among users.
It mandated the adoption of card-on-file (CoF) tokenization applicable to domestic online purchases.
Ready for implementation
The deadline of the countrywide adoption to card tokenization was extended by six months from January 1 to July 1 2022, to ensure a smooth transition.
There will be no more deadline extensions now since the payment ecosystem is by and large ready to implement the card tokenization rule.
How it will work
When you start an online transaction with a merchant, the merchant will ask for your consent to tokenize your card.
Once you approve, the merchant will send a tokenisation request to the card network.
The card network will then create a token, which will act as a proxy to your 16-digit card number, and send it back to the merchant.
The merchant will save this token for future transactions.
You will also have to enter your CVV and OTP like before to approve the transaction.
If you want to use another card, the same process is to be followed again.
You should know
Tokenization process is not mandatory and a customer can choose whether or not to let his / her card tokenized.
In such cases the customer will have to re-enter all card details while purchasing anything online.