What is Card Tokenization System?

Card Tokenization System will tighten the screws on cyber fraud and misuse of debit-credit cards. This tokenization system will keep the customer’s financial information confidential and avoid fraud.

Card Tokenization System

Under this system, instead of giving debit-credit card details like card number, cardholder name, card expiry date and CVC number etc. for payment, a unique token number of 4 or 6 digits will be issued, through which all transactions like purchase, payment etc. can be made.

Under the token system, a new token number will be issued through card networks such as Visa, Mastercard and Rupay. Some bank card networks may also require bank approval before issuing tokens.

This card tokenization system will keep the customer’s financial information confidential and no merchant will be able to save your card details. Only your token will go to the merchant so that all your details will remain confidential.

Customers shall have the right to register or de-register themselves for any of the services such as contactless, QR code or in-app purchase.

Online shopping will now be more secure with this new token system. There will be strictness in cases of debit-credit card misuse and cyber fraud.

How does the card tokenization system work?

  • Card details will not be saved on the merchant platform-payment gateway.
  • The 4 or 6 digit Secure Token Number has to be given instead of the card details for the purchase.
  • A separate token number has to be given for each purchase from each platform.
  • The customer will enter the unique token number generated from the app for payment.
  • The merchant platform will send it to the acquiring bank.
  • The bank will then send the token to the card network.
  • The token’s data will be safe in the bank’s wallet.
  • It will then be sent to the issuing bank.
  • Token along with PAN, account number information, will be sent to the issuing bank.
  • The issuing bank will verify the amount of the payment and approve the transaction.

Advantages of Card Tokenization System

  • The store operator or any other payment gateway will not be able to store the details of the pass card.
  • With this system, the data privacy of the customers will be maintained.
  • Card details will not have to be shared with any third party app.
  • This system will significantly reduce the risk of online fraud with the customers.
  • Customers can fix the daily transaction limit as per their convenience.
  • Under the token system, a unique code will be issued for each purchase.
  • You need to enter the unique token number generated for the transaction.
  • Customer may de-register the In-App Purchase at any time.
  • The privacy and transaction details of the customers will be protected.
  • Customers will get the facility to do secure transactions without any hassle.

Will the payment gateway or other service provider be able to store the card data?

No, payment aggregators, payment gateways, e-commerce platforms or other service providers cannot store debit/credit card data after the introduction of card tokenization system as per RBI directives.

Is a card tokenization system mandatory?

RBI has not mandated the card tokenization system. This token arrangement will depend on the wishes of the customers. Customers who do not listen to this option must enter full card details every time they purchase or pay using the debit/credit card.

What is the purpose of the card tokenization system?

The RBI token system is aimed at curbing the rising cases of cyber fraud and providing the best financial transaction experience to customers while maintaining their privacy. After the implementation of this rule, whenever a transaction is done with a credit or debit card, payment companies will not be able to store the data of the customer’s card.

Will there be any additional charges for the card tokenization system?

There is no additional cost to the user to avail this new token system facility. You can enjoy this new facility at no additional cost and avoid cyber frauds by securing all your financial transactions.

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