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RBI Introduces New Rules for Tokenization of Debit and Credit Cards via Banks
RBI Introduces New Rules for Tokenization of Debit and Credit Cards via Banks
The Reserve Bank of India has issued new guidelines on how individuals can tokenize their debit and credit cards via their banks. The tokenization process involves replacing actual card details with a unique code called a “token,” which is used for online transactions. This process is considered safer as the actual card details are not shared with the merchant during transaction processing, thus enhancing security.
Key Takeaways:
1. Tokenization of debit and credit cards can be done through mobile banking and internet banking channels.
2. Explicit consent from the customer must be taken for tokenization, and it must be done with Additional Factor Authentication (AFA).
3. Customers have the option to select multiple merchants for tokenization and can combine two-factor authentication for all the merchants.
4. There is no time limit to tokenize the cards, and no charges are to be paid for generating tokens of debit and credit cards.
5. The new rules aim to enhance security and convenience for individuals using debit and credit cards for online transactions.
The Reserve Bank of India (RBI) has issued new guidelines on how individuals can tokenize their debit and credit cards via their banks. Tokenization refers to the replacement of actual card details with a unique code called a “token,” which is used for online transactions. This process is considered safer as the actual card details are not shared with the merchant during transaction processing, thus enhancing security.
Here are the key points regarding the tokenization of debit and credit cards as per the new RBI guidelines:
1. Tokenization Process: The tokenization of debit and credit cards can be done through mobile banking and internet banking channels. To generate the tokens for cards, explicit consent from the customer must be taken. The tokenization of cards must be done with Additional Factor Authentication (AFA), also known as two-factor authentication.
2. Customer Convenience: The new rules offer a third method for customers to tokenize their debit and credit cards, providing them with more options for completing online transactions.
3. Merchant Selection: An individual can select multiple merchants while tokenizing their cards, and two-factor authentication can be combined for all the merchants. Once the card is tokenized, the generated tokens will be available on the merchant’s payment page in the cardholder account of the merchant.
4. No Time Limit: There is no time limit to tokenize the cards. A debit and/or credit card can be tokenized at any time as per the individual’s convenience, whether it’s when a new card is received or at a later date.
5. List of Merchants: The bank or the card issuer is required to provide the complete list of merchants for whom it can provide tokenization services. An individual can select the merchants with whom he/she wishes to maintain tokens.
6. Tokenization FAQs: According to the tokenization FAQs issued by the RBI, a tokenized card transaction is considered safer as the actual card details are not shared with the merchant during transaction processing.
7. No Charges: There are no charges to be paid for generating tokens of debit and credit cards. Additionally, a customer will have the option to set and modify per-transaction and daily transaction limits for tokenized card transactions.
8. RBI Governor’s Statement: The RBI governor mentioned that the introduction of Card-on-File Tokenization (CoFT) has improved transaction security and transaction approval rate. The measure to introduce CoF token creation facilities directly at the issuer bank level is aimed at enhancing convenience for cardholders to get tokens created and linked to their existing accounts with various e-commerce applications.
These new guidelines aim to enhance security and convenience for individuals using debit and credit cards for online transactions.
FAQ:
Q: What is tokenization of debit and credit cards?
A: Tokenization refers to the replacement of actual card details with a unique code called a “token,” which is used for online transactions. This process is considered safer as the actual card details are not shared with the merchant during transaction processing.
Q2: How can individuals tokenize their debit and credit cards?
A2: Individuals can tokenize their debit and credit cards through mobile banking and internet banking channels, with explicit consent and Additional Factor Authentication (AFA) required for the process.
Q3: Are there any charges for generating tokens of debit and credit cards?
A3: No, there are no charges to be paid for generating tokens of debit and credit cards.
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