Earlier this rule was going to come into force from January 01. Taking into account the suggestions received from various stakeholders, RBI had extended the deadline for storing cord-on-file data from December 31, 2021 to June 30, 2022. Later it was again extended till 30 September. Now the Reserve Bank is not considering to extend this deadline further.
For people using Credit Card and Debit Card, some rules are going to change from next month. The Card-on-File Tokenization (CoF Card Tokenization) rule of the Reserve Bank of India is going to come into force from October 01. The Reserve Bank of India (RBI Tokenisation) says that after the implementation of the tokenization system, the payment experience of cardholders will improve and debit card and credit card transactions will be more secure than before.
RBI has extended the deadline twice
After the implementation of the new rules, whenever customers make payment by credit card and debit card at point of sale machines, online or in any app, their card details will be stored in the form of encrypted tokens. Earlier this rule was going to come into force from January 01. Taking into account the suggestions received from various stakeholders, RBI had extended the deadline for storing cord-on-file data from December 31, 2021 to June 30, 2022. Later it was again extended till 30 September. Now the Reserve Bank is not considering to extend this deadline further. This means that now payment companies will have to erase the data of people’s credit cards and debit cards after 30 September 2022.
Merchants have issued so many crore tokens
According to a report by news agency PTI, most of the big merchants have already adopted the new rules of tokenization of the Reserve Bank. The report quoted sources as saying that so far 195 crore tokens have been issued to customers in lieu of debit cards and credit cards. Many digital payment companies were demanding from the Reserve Bank to extend this deadline. The companies argued that they have not yet been able to do so. Implementation of the new system in such a short time can affect the business. Companies were saying that there are still many operational problems in implementing this change. Now that most companies have implemented it, there is little hope of extending the deadline further.
What is this tokenization
Under the new arrangement, the Reserve Bank has prohibited payment companies from storing the data of customers’ credit cards or debit cards. Payment companies will now have to provide an alternate code in lieu of the card, which is named Token. These tokens will be unique and the same token will work for multiple cards. Once this is implemented, the unique token will have to be used instead of using the card directly for online payment.
Fraud cases will be reduced by token system
The Reserve Bank believes that the implementation of the system of payment with tokens in lieu of cards will reduce the cases of fraud. At present, the risk of fraud with customers increases due to leaking of credit card or debit card information. The new system is expected to reduce such cases of fraud. The Reserve Bank says that at present, e-commerce websites, merchant stores and apps etc. store the card details after the customers make payment with debit card and credit card. In many cases, merchants are left with no option but to store the card details before the customers. If these details are leaked, there is a possibility of customers being duped. These dangers will be reduced with the new rules of the Reserve Bank.
