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Tokenization is the new buzzword in the payments industry, especially with the RBI extending the tokenization deadline to September 30. But what is tokenization all about?And how exactly is this beneficial for buyers and how it is going to attempt to reduce fraud?
Let’s explore it now!
What exactly is Tokenization in online shopping?
Tokenization in layman’s language means substituting existing card details with a unique code called a token. It protects sensitive payment credentials like the 16-digit card number,and expiry date with a unique code, as instructed by RBI.
The buying experience is just as same as before but now with enhanced security and convenience. The motive behind bringing in tokenization was to build a strong ecosystem where merchants and buyers can conveniently make purchases without worrying much about fraud.
Benefits of Tokenization
The major reason behind adopting tokenization as a part of the payment method was to fight off online fraud and curb digital payment breaches. However, tokenization is much more than that, and here are its benefits:
Once your credit or debit card is tokenized you will be able to checkout products quickly in a few seconds. You will not have to enter card details with every transaction. Save your card for once and you are all set to purchase anything with just a click.
Whenever you make a purchase online, for every new merchant, there will be a new token generated, giving you overall security. Moreover, after tokenization, only the last four digits of your card will be visible on the merchant’s site, and the rest will be masked. And whenever your card is upgraded, renewed, or reissued, you don’t have to worry, a new
token will be generated.
Fewer/No transaction declines
Transaction decline is one of the major issues customers face while buying any product online. And fraudsters, on the other hand, found their way out to loot customers by making the transaction look fraudulent and enjoying the whole amount in their account. With tokenization, the chance of this fraud happening is greatly reduced since tokens conform to
the security of the highest order.
No need for carrying a physical card
Just like others, are you tired of carrying your card every time and everywhere you make a purchase? Well, with tokenization this won’t be the scenario since over here you get a virtual version of your card that you can store on your smartphone.
Other major benefits of tokenization include you as a buyer will always know which card has been tokenized and also with which merchant. Moreover, once your card is tokenized,you will even get major cashback benefits on platforms like Amazon, Flipkart, PhonePe,Myntra, and more.
Enjoyed reading the benefits? Now here’s a step-by-step guide on how to tokenize yourcard.
Usually, merchants ask customers to save their card details on the platform itself, but this is not very secure. For example, what if the merchant’s website gets hacked and the details are leaked? Hence, to resolve this issue, the RBI has made tokenization mandatory from Oct 1, 2022. And with tokenization, the responsibility of card security is not on merchants, but on processors and banks.
For tokenizing your card, you need to:
● Make a purchase on the merchant’s website and initiate a transaction
● Select preferred card options and enter all the details
● Click on the ‘secure your card as per RBI guidelines’ option
● Enter the OTP received on the bank page
● Once you have entered the OTP, your card details are now sent for token generation and transaction authorization
● The token generated is then sent to the merchant who later stores it against the customer identification data
● The card details of the customer are then stored on the same merchant website,with the last four digits being visible, and other masked
● Now every time the customer makes a purchase on the merchant’s website, a new token will be generated by the bank!
So, is it important to tokenize your card before September 30?
The choice of whether to tokenize or not to tokenize their debit and credit card is on the customer itself. They can continue shopping the way they used to – manually entering the card details. However, with tokenization, they do get an option to decide if they want to store the card details on the merchant’s website for future purchases.
The good part is that in India, the bigger e-commerce platforms like Amazon have already embraced tokenization. However, in the case of smaller merchants, readiness for tokenization is not absolute. They still need time to test their systems, and there might be a few hiccups as the mandate becomes compulsory on October 1.
Tokenization is the latest revolution in the payment industry. It is truly a huge leap towards secure and safe shopping. All the industry needs is a little more time for Tokenization readiness.