Tokenisation, in a nutshell, is the process of replacing sensitive data with a non-sensitive equivalent, known as a token. Tokenisation can protect data such as credit card numbers, personal information, or other confidential information with a unique set of characters.
This tokenization allows the customers to purchase goods or services in a single click without revealing any of their confidential information. The characters are considered a substitute for the actual data. Earlier RBI e-commerce transaction guidelines were released with the same initiative. The main motive behind the RBI's push for faster adoption of tokenisation is to make digital payments more secure and faster. Tokenisation can be used in various ways to protect different types of data. For example, it can be used to protect credit card numbers, personal information, or other confidential information. Tokenisation can also be used to speed up digital transactions.
The RBI is working with various stakeholders to promote the use of tokenization in India. The aim is to make digital payments more secure and faster. Tokenisation will also help reduce the chances of fraud and data breaches. Starting from January 1, 2022, merchants were prohibited from saving the customers' sensitive information such as CVV, expiry date, and OTP.
As an alternative, merchants were mandated to adopt card-on-file tokenisation for storing customer card details. Tokens are irreversible and randomly generated numbers that replace sensitive card data. They are shorter in length, making them more difficult to steal than the actual credit or debit card number.
Ravi Battula, Vice President - Merchant acquiring a business, Wimbo - A PayU company, said that the tokenization protects the card details of customers as the data is not stored on the merchant site or app. "It helps in reducing the chances of data breaches and also offers an extra layer of security to digital payments," he added.
There are various reasons why the RBI is pushing for faster adoption of tokenisation in India. Tokenisation will help make digital payments more secure and faster. It will also help reduce the chances of fraud and data breaches. RBI is also working with various stakeholders to promote the use of tokenisation in India.
The rise of digital payments in India has made it essential for the RBI to promote the use of tokenisation. With more and more people using digital payments, there is a greater need for security.
He added that the UPI adoption is also pushing the need for tokenization as it makes digital payments more convenient and fast. "Tokenisation will help make digital payments more secure for online payments for, recurring payments, and subscription payments.
There would be initial friction at the time of adoption, but in the long run, it would be a great enabler for both customers and merchants.
Pavankumar Baboori is an experienced Sr. Content Analyst who improves the workflow by identifying and resolving the content development gap. He works closely with the marketing team to deploy strategies for improving brand awareness, website traffic, search engine ranking, and lead generation activities. He gauges up marketing channels for the real digital transformations.
Leave a Comment
