Online shopping has revolutionised the way we shop and rightly so! The convenience of having almost everything delivered to your doorstep has made it the preferred way of shopping for millions of people. Another notable advantagse which online shopping offers is the multitude of payment options – net banking, credit/debit cards, mobile wallets, UPI, or payment on delivery.
However, the tremendous surge in online shopping has also resulted in increased data security breaches. The Reserve Bank of India has implemented several measures over the last few years to combat this cybersecurity risk. Tokenisation of cards is the latest online safety measure that has been announced by the regulatory body. It has been designed to safeguard the consumer’s financial data while shopping online.
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Why Is Tokenisation Needed?
Whenever you shop on an e-commerce app or website, you are usually asked for permission to save your credit/debit card details – card expiry date, etc., so that you can make future transactions faster. However, this convenience comes with a security risk. Your stored data is at risk of being leaked or hacked for unauthorised or fraudulent activities, which can lead to financial losses. This security risk is what tokenisation will aim to address.
Tokenisation was first proposed by the RBI in March 2020, with an implementation deadline of September 2021. This deadline has now been postponed to September 30, 2022.
What is tokenisation?
Tokenisation is a process wherein your card details would be replaced with an alternate, encrypted code known as a ‘token’. Each token is a unique combination of the card, token requestor, and device through which the request has been made. Merchants will use these tokens to process online payments made using a debit or credit card instead of saving the customer’s actual card details. Starting October 1, 2022, customers will be asked to tokenise their cards when shopping online.
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Is it mandatory?
Getting your card tokenised is not mandatory. As a customer, you can choose whether or not to get your card tokenised. Moreover, you will also have the option to register or de-register your card for a specific form of payment such as contactless, in-app, or QR code-based payment methods.
How will you be impacted?
From October 1, 2022, tokenisation will affect payments that are currently being done via auto-debit or standing instructions. E-commerce merchants have been instructed to delete all customer payment data, which means payment details will have to be re-entered by customers for each fresh transaction. Tokenising your card will save you from this hassle, while also adding an extra layer of security to your online transactions.
Who will address my complaints?
Tokenisation-related complaints will be addressed by the card issuers. Whether it is reporting the loss of an identified device or flagging a transaction which risks the token being exposed to unauthorized use, the onus is on the issuer to resolve all such complaints.
Tokenisation is a great step towards promoting data security for online transactions. If you shop online frequently, tokenising your card is worth considering, especially given the peace of mind it promises.
