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Benefits Of Card Tokenization For Secure Payment Processing

Benefits Of Card Tokenization For Secure Payment Processing


Card tokenization is a process that replaces sensitive card information with a unique identifier called a token. The token can be used to process payments without exposing the actual card details, such as the card number, expiry date, or CVV code. This reduces the risk of card fraud and data breaches, as well as simplifies the compliance with payment security standards.

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Reserve Bank of India has issued guidelines for card tokenization in January 2019, with an aim to protect the cardholders’ data and comply with the latest data safety rules. The RBI has mandated the implementation of card tokenization for all card transactions by June 30, 2022.

According to the RBI guidelines, card tokenization can be offered by banks, with the support of card networks, to holders of debit, credit and prepaid cards. The cardholders can request for tokenization of their cards through a token requestor, which is an entity that accepts the request and passes it on to the card network to issue a corresponding token. The token requestor can be a third-party app provider, an e-commerce platform, a merchant or any other entity that facilitates payments. The token issued by the card network is unique for a combination of card, token requestor and device (such as mobile phone, tablet, laptop etc.). The token can only be used for transactions through the specific device and with the specific token requestor. The token cannot be used for any other purpose or with any other entity.

The cardholders can also de-tokenise their cards, which means they can revoke the tokens and restore their original card details. The de-tokenisation process can be initiated by the cardholders through their banks or the token requestors.

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The RBI has also specified certain conditions and requirements for offering card tokenization services. Some of them are:

Benefits Of Card Tokenization

Card tokenization has many benefits for secure payment processing in the Indian payment industry, it has become an essential part of payment stack of every business having online presence Some of these benefits are:

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In conclusion, card tokenization is a legal and regulatory framework that enables secure and seamless payments using tokens instead of actual card details. It is expected to boost the growth and innovation of the Indian payment industry and provide better customer experience and protection. However, it also requires careful implementation and coordination among various stakeholders to ensure its success and sustainability.

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