Tokenisation of Cards

04 Oct 2022 Tokenisation of Cards

Posted at 14:53h in Daily current-affairs by sharad 0 Comments

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Source: The Indian Express

News: For security and safety of card transactions Reserve Bank of India started card-on-file (CoF) tokenisation from 1st October.

Concept of Card tokenisation:

Tokenisation is replacement of actual card details with a unique alternate code or ‘token’.
Generated token through tokenisation shall be unique for a combination of card, token requestor and the device.
Establishment of a new entity known as Token requester for processing tokenisation requests of consumers.
No charge for availing tokenisation service.
Institution that can offer tokenisation services: Any authorized card network having original Primary Account Number (PAN) can perform card Tokenisation.
Card networks have to ensure integrity of the token generation process through adequate safeguards so that PAN cannot be found out from the token and vice versa, by anyone except the card network.

Mechanism of Card tokenisation:

First Step: Initiation of request by debit debit or credit card holders on the app provided by the token requester.
Second Step: Token requester forward the request to the card network.
Third Step: After taking consent from the card issuer, the token requester issues a token corresponding to the combination of the card, the token requester, and the device.
Working Mechanism: Instead of actual card details a unique token will be stored on the server for online transactions.When a transaction is made, a merchant or transaction platform sends out a message to Visa or Mastercard or a payment gateway asking for a token against that card number and this request for token then passed to the respective banks for transaction.

Card tokenisation facility is available to:

Ist Category: Initially, facility for card tokenisation was available for card holders’s mobile phones and tablets.
2nd Category: Further RBI extended the scope of tokenisation. Now, it includes consumer devices such as laptops, desktops, wearables (wrist watches, bands, etc.) and Internet of Things (IoT) devices.

Benefits associated with card tokenisation:

Safe: As actual card details are not shared with the merchant during transaction processing. Also token requestor cannot store Primary Account Number (PAN), or any other card detail.
Secure: Relevant details such as actual card data, token etc are stored in a secure mode by the authorised card networks.
Conformation to international best practices/globally accepted standards for safety and security: Token requester needs to be certified for safety and security through card networks.
Protection of customer’s card details from data breach or hacking attempt due to generation of card and merchant specific token.
Tokenization lends greater credibility to seamless and secure payments experience.

Article: Tokenisation for credit and debit card transactions: What is it, and how does it help you?

Article Link: https://indianexpress.com/article/explained/explained-economics/tokenisation-for-credit-