RBI asks banks to create token for e-payments

The online transaction rules for credit and debit cards will be changed from October 1, for all users. In order to make all e-payments safe, secure, convenient, quick and affordable, the Reserve Bank of India has asked all banks to create token for card details. In layman's language, all online, point-of- sale and in-app transactions done by debit and credit cards will have to be replaced by token issued by the banks.

The token issued by the operating bank replaces the debit or credit card details with a token. The user will not punch in the 16 digits engraved on his or her card while paying for something online. The banks will issue a non-sensitive equivalent token for the transactions. The card information will no longer be available on any merchant, Payment Gateway or third-party platform. The process will mask names on the card, expiry dates and CVV codes.

Entities can save the last four digits of the card issuer's name to track the transaction.

From October 1, the token generated for transactions will be unique and irreversible. No one can decode the payment process and breach the security layers.

More details can be found here.

The new system will bring down chargebacks, disputes and fraud, and will help the consumers, merchants, and banks.

After a customer enters all the card details, the first step towards tokenisation will be securing your card as per RBI guidelines. The merchant will request the operating bank to generate a unique token for a specific transaction. Once consent is given, the merchant will send the request to the card network.

The buyer will get an OTP on his or her mobile or email from the card issuer, which must be filled on the bank page, and then the token will be generated. The token will be mailed to the merchant. He can save it with the customer's phone and email ID in case of technical issues.

More than 52 million cards have been tokenised by Paytm, according to news reports. Payments platform PayU has reported that it has tokenised over 50 million ahead of the deadline. PhonePe has said it has 15 million debit and credit cards so far and is in line with RBI's deadline.