Sunita Patel is a retired university professor. Since the Covid-19 pandemic, she has avoided stepping out of her house unless it is absolutely necessary. She makes all her purchases online. Recently, she heard that the Reserve Bank of India (RBI)
had mandated all authorised card networks to issue tokens against card details for all transactions on e-commerce portals. But what does this mean for Sunita and customers like her, who use their cards for online purchases regularly? Read
on to find out more.
1. What is tokenization?
Tokenization means replacing credit and debit card details with alternative codes called tokens. Under this mechanism, online merchants will now have to use token numbers instead of card data to store their
customers' cards on their platforms.
2. What are the benefits of tokenization?
- The chances of fraud arising from sharing card details are minimised as online merchants will only store unique codes and not the actual card numbers.
- Card data can be stored only by the card networks and card-issuing banks.
3. For how many merchants will a token generated on a card be valid?
One token is valid only for one card and one merchant. So, if you tokenize your credit card for one e-commerce site, the same card will have a different token on another site. This is to prevent fraud. Besides,
you can request credit card tokenization on any number of cards for performing a transaction.
4. What are the charges for availing of tokenization benefits?
Debit card tokenization services can be availed by anyone free of charge.
5. Is tokenization of cards mandatory?
No, the process of tokenization is not mandatory as of now. So, every time you make a purchase online, you either make a token and save it on the particular website for your future use or enter your card details every time you buy something. Merchants
have been asked by RBI to delete any previously stored data by June 30, 2022.
[Also Read: Here's How You Can Get The Best Out Of Your Credit Card]
6. What happens when your cards are tokenized?
- Every time you check out from an e-commerce portal, the merchant forwards the purchase details to the respective bank or card networks (VISA, Rupay, Mastercard, etc.).
- A token is then generated and sent back to your merchant, and your merchant might save that token for you based on your choice.
- You can select this saved token when you check out the next time you shop from that e-commerce portal.
- The end-customer experience does not change under this mechanism. Your card details will be masked, and only the last four digits of your card will be visible.
7. What will happen to the tokens if you replace, renew, or upgrade your cards?
If you ever replace, renew, or upgrade your cards, you have to again create a fresh token on the merchant's portal because the new card will have a new number and a different CVV.
8. What if a merchant's portal is hacked?
Previously, when the online shopping portals were hacked, all your details would get leaked. But under the tokenization process, you will get a token issued by a bank before you make a purchase from an e-commerce portal. That token will be valid
only for that particular e-commerce portal. As a result, even if the e-commerce portal gets hacked, your data is safe as unique tokens have replaced it.
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