Tokenization can ensure better security for both customers and digital payment platforms for transactions, believe fintech owners.
The Reserve Bank of India (RBI) has introduced a new method, tokenization, that will let customers do online transactions without saving DEBIT OR CREDIT card details. The method was supposed to be effective from January 1, 2022, but keeping in mind the interest of debit and credit card cardholders, RBI has decided to extend the implementation of tokenisation to July 1, 2022.
This new mode of payment has mainly been introduced to ensure that the transactions are seamless without exposing the customers’ confidential data. After tokenization, details like the debit or credit card number, CVV number and expiry date will no longer be required for digital payments.
A Step To Ensure Better Security
While digital financial frauds are on the rise, the fear of falling prey to financial frauds is a growing concern among customers. Tokenization shields businesses from the negative financial impact of data theft as even if there is a breach, the merchant would not have important data that can be stolen. Though tokenization can't shield your business from an information and data breach, it can diminish the chances of any possible breach.
“From secure in-store retail POS (Point of sale) transactions to payments on the go, from conventional e-commerce to another age of in-app payments, tokenization makes paying with the gadgets simpler and more secure than at any other time,” mentioned Akash Sinha, CEO and co-founder, Cashfree Payments, a payment disbursal platform used by businesses to do bulk payouts, to Outlook Money.
The tokenisation solution will essentially replace all the information of a cardholder of debit and credit card with a randomly generated number called a “token”. An OTP-based two-factor authentication method along with cryptograms unique to each transaction will be used so that the same token cannot be used on other merchant platforms. The cryptogram is a method of ensuring better security where details/ information are encoded on encrypted texts. (To know more, read here.)
More Convenience
The owners of various fintech platforms believe that not only WILL this move ensure better security for customers, it will also enhance SMOOTHEN? the transaction process for e-commerce sites and on digital platforms. “This will be a turnkey solution for businesses, allowing their end-customers to continue experiencing the convenience of saved card transactions with added security. It is our endeavoUr to enable businesses with the right understanding of why this move is the need of the hour and how they can navigate through the first few weeks of the mandate kicking in,” adds Shashank Kumar, co-founder of Razorpay, a digital payment software company.