new era of safer digital payments: Mastercard
Card-on-File Tokenization will usher in a new
era of safer digital payments: Mastercard
India 2021: To safeguard India from mounting cyber
and financial fraud cases, the Reserve Bank of India rolled out a landmark
decision in September 2021. The new regulation by the central bank permitted
the payments networks and issuer Banks to offer card tokenization services as
Token Service Providers (TSPs) to the e-commerce Merchants
and Payment Aggregators starting 01 January 2022. This permission is an
extension to the device-based tokenization services provided by payments
network.
Tokenization is a mechanism
to replace card numbers with a token, i.e., a virtual number, specific to a merchant.
When a consumer logs into a merchant app or website, where their card details
were stored, they only see the last 4 digits of the original card number. At
the backend, TSPs will replace the card number with a
token, ensuring that card details are not stored anywhere in the value chain,
except for issuer banks and the networks. The process makes card-based
transactions safer and more reliable. The process of tokenization will be based
on consumer consent, validated through an additional factor authentication.
For
consumers, who have their card details stored on multiple e-commerce merchants,
their card details will be converted into token if they transact before 1st
Jan 2022. Post the deadline, the consumer will have to enter their details one
time to convert into tokens. For all subsequent transactions, consumers can
continue to enjoy the single-click checkout experience that they have today. For
consumers who are using their card details for the first time on e-commerce
apps or websites, RBI has given them a seamless option to provide consent with
an additional factor of authentication like OTP as part of the checkout process.
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