Reserve Bank of India mandates tokenization of cards for online transaction by September 30

Online shopping is highly preferred in this digital era. In order to make cash free transactions use of credit card and debit card had gained immense popularity. However in this process highly sensitive data is being shared with the e-commerce platforms and thus gets exposure to leakage and misuse.

When you buy something online, you share your credit card or debit card information with the e-commerce platform. This highly sensitive data, which is now stored by the platform, is vulnerable to data theft or leakage. India’s central bank, the Reserve Bank of India suggested tokenization of cards to make online transactions more secure.

numbers that retain all the essential information about the data without compromising its security. The idea is to hide card numbers and protect sensitive consumer data with tokens containing randomised numbers and alphabets.

As per RBI’s, tokenization would replace sensitive payment credentials such as 16-digit plastic card numbers, names, expiry dates, and codes with a unique alternate card number, or ‘token.’ The online platforms would be unable to store your data though they can enable transactions through tokens,

Ravi Battula, VP - merchant acquiring business), Wibmo – a PayU company, informed Business Insider India "India needs more secure online payment standards as there is an increase in digital payments. The future data protection standards that are presently being considered can eventually work with tokenization. It is a fundamental shift in the ecosystem that requires a large investment from stakeholders in the payment industry, banks, and card networks to adopt and adhere in full".

Around 19.5 crore tokens had been created in June 24. Domestic plastic card holders possess the liberty to create tokens for their credit and debit cards free of charge through any e-commerce platform or merchant website. However, cannot be used for payment at any other e-commerce website. RBI has directed by September 30, 2022 all stakeholders to be ready for handling tokenized transactions.