Industry not prepared, deadline for tokenisation prolonged

The Reserve Bank of India (RBI) on Thursday prolonged the timeline for implementation of the brand new credit score and debit card knowledge storage norms, or card-on-file tokenisation (CoF) by six months to June 30, 2022. The RBI transfer follows intervention by digital cost companies, service provider our bodies and banks which had sought extra time to combine the methods and onboard all of the stakeholders amid fears over disruption of enterprise transactions.
After June 2022, credit score and debit card knowledge needs to be purged from the web methods of retailers, the central financial institution stated. In addition to tokenisation, business stakeholders might devise alternate mechanisms to deal with any use case, together with recurring e-mandates and EMI choice or post-transaction exercise, together with chargeback dealing with, dispute decision, reward or loyalty programme, that presently entails storage of CoF knowledge by entities apart from card issuers and card networks, the RBI stated in a notification.

In September 2021, the RBI prohibited retailers from storing buyer card particulars on their servers with impact from January 01, 2022, and mandated the adoption of CoF tokenisation as an alternative choice to card storage.
Tokenisation refers to substitute of precise credit score and debit card particulars with an alternate code referred to as the “token”, which will probably be distinctive for a mixture of card, token requestor and machine. A tokenised card transaction is taken into account safer because the precise card particulars usually are not shared with the service provider throughout transaction processing. Customers who shouldn’t have the tokenisation facility should key of their title, 16-digit card quantity, expiry date and CVV every time they order one thing on-line.

If carried out within the current state of readiness, the brand new RBI mandate might trigger main disruptions and lack of income, particularly for retailers, Industry our bodies stated. “Disruptions of this nature erode trust in digital payments and reverses consumer habits back towards cash-based payments,” Merchant Payments Alliance of India (MPAI) and the Alliance of Digital India Foundation (ADIF) stated in a joint letter to the RBI.

They have voiced their considerations over business readiness on the RBI directive on card-on-file tokenisation and urged the central financial institution for an extension of the December 31 deadline for implementation of card knowledge storage norms. Sources stated some banks have additionally written to the RBI looking for extension of implementation of the brand new norms.
Online retailers can lose as much as 20-40 per cent of their revenues publish December 31 attributable to tokenisation norms, and for a lot of of them, particularly smaller ones, this might sound the dying knell, inflicting them to close store, in response to individuals at a digital session on Digital Payments and the India Media Consumer by the CII’s Media and Entertainment Committee on Wednesday.
Merchants can’t begin the testing and certification of their cost processing methods till banks, card networks and PA/PGs are licensed and dwell with secure APIs for consumer-ready options, business officers stated.