The rules for online credit and debit cards will change as of January 1; know how tokenization to impact transactions

Today, making payments online has become more common than carrying cash. Almost all day-to-day activities are performed using online payments or credit and debit cards. As a result, the Reserve Bank of India (RBI) has requested all merchants and payment gateways to erase sensitive customer information of debit and credit cards that are registered on their end in order to make online payments more safe and secure.

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How will the use of credit and debit cards change from January 1?

It should be noted that the new rules for debit and credit cards will come into effect on January 1, 2022, and the RBI has asked retailers and payment gateways to conduct transactions using encrypted tokens.

According to an RBI press release on September 7, 2021, in accordance with the new laws, starting in January 2022, when a customer makes the first payment to a merchant, they will need to provide an Additional Verification Item (AFA). After that, the customer completes the payment by entering the CVV and OTP of the card.

What is tokenization?

Tokenization is the process of replacing an actual card number with a different code that will be converted into a token. For future online purchases, tokenized card data may be used in place of an actual card number, depending on the card user’s instructions. Token cards are safer to use for making payments and sharing with internet businesses than actual card numbers.

How to tokenize the card?

It should be noted that the card holder can have the card tokenized by initiating a request on the application provided by the token requester. The token requester will forward the request to the card network which, with the consent of the card issuer, will issue a token corresponding to the combination of the card, the token requester, and the device.

It should be mentioned that tokenization cards are applicable to mobile credit cards for payments such as NFC-enabled POS transactions, online or offline payments based on Bharat QR code. Also included are all potential online and offline merchants.


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David A. Albanese