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What is Tokenisation and what are the advantages of opting for it?

Features & updates - 5 Feb, 2024

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The Reserve Bank of India (RBI) introduced a new regulation in October 2022 that requires card transactions to be tokenised. This step aims to strengthen online security by adding an extra layer of protection against fraud.

Ever wonder how online payments stay secure? Meet Card Tokenisation!

Instead of storing your actual card details like the 16-digit number, name, expiry date, and CVV, merchants and payment gateways will now use a unique code called a token. This token acts as a substitute for your real card information.

This Tokenisation process happens only with your consent and involves an additional factor of authentication (AFA) for added security. You can also choose when and where to use the token, and even set transaction limits based on your preferences.

By replacing sensitive card details with tokens, this initiative significantly reduces the risk of fraud in online transactions. Even if a data breach occurs, hackers will only obtain meaningless tokens, protecting your actual card information.

This shift towards Tokenisation empowers you with more control and peace of mind while making online payments.

What is card tokenisation?

Card Tokenisation is like a secret code for your credit card. It replaces your actual card number with a unique, unlinkable token for secure online payments. Imagine it like a nickname for your card - used for transactions, but protecting your real identity.

Demystifying card Tokenisation: Safeguarding your plastic in the digital age

Ever wish you could shop online without revealing your actual credit card number? That’s the power of card Tokenisation, a rapidly growing security measure. Let’s explore how it works, its benefits, and why it’s crucial for businesses in today’s digital world.

Under the hood of Tokenisation:

Imagine creating a secret code for your card. Instead of sharing the 16-digit number, a unique identifier called a “token” is generated. This token, linked to your card but devoid of sensitive information, acts as your stand-in during online transactions.

Credit vs. Debit Tokenisation:

Both credit and debit cards can be tokenised, offering the same level of security. The process remains similar, replacing the card number with a unique token specific to the transaction and merchant.

Distinct from EMV:

While both enhance security, they serve different purposes. EMV chips protect card data at physical terminals, while Tokenisation safeguards online transactions. Think of them as two layers of defense: EMV for in-person purchases and Tokenisation for the digital realm.

Tokenisation in action:

Mobile wallets: Popular wallets like Amazon Pay, GooglePay, Paytm, and PhonePe utilize Tokenisation. When you add your card, a unique token is generated and securely stored within the app.
Online shopping: Many e-commerce platforms offer Tokenisation. Once you tokenize your card, future purchases only require selecting the saved token, eliminating the need to re-enter your details.

India’s focus on Tokenisation:

India actively promotes Tokenisation to combat online fraud. The Reserve Bank of India (RBI) has mandated Tokenisation for specific card transactions, aiming to create a safer digital payment ecosystem.

Why businesses should invest in Tokenisation:

Tokenisation benefits both businesses and customers:

Enhanced security: By not storing sensitive card data, businesses minimize the risk of data breaches and associated costs.
Improved customer experience: Faster checkout with saved tokens translates to happier customers and potentially higher sales.
Compliance with regulations: Tokenisation helps businesses comply with data privacy regulations, like India’s RBI guidelines.

RBI’s Tokenisation mandate: An extra layer of protection

The Reserve Bank of India (RBI) has made Tokenisation mandatory, adding another layer of security to online transactions. Here’s what it entails:

Secure storage: Authorized card networks securely store your actual card details (PAN, card number, etc.) in the form of tokens.
Restricted access: Merchants and other entities requesting tokens are prohibited from storing any sensitive card information, including the actual card number or password associated with the token.
Strict security standards: Token requestors must comply with stringent international security practices to ensure the safety of your data.

In essence, Tokenisation offers a convenient and secure way to shop online. By replacing sensitive card details with tokens, it simplifies the payment process while protecting your financial information from potential threats.

Enhance your card security with tokenisation

Protect your financial information with Tokenisation, a powerful tool that safeguards your card details during online transactions.

Here’s how it works:

Unique Identification: Each merchant you shop with receives a unique identifier, called a token, instead of your actual card number. This significantly reduces the risk of fraud, as stolen tokens hold no value to attackers.
Free and Convenient: Tokenisation is often free and readily available for most cards. You can easily tokenize your cards using your mobile phone or other devices.
Flexibility: Use any of your authorized cards to complete transactions, regardless of which one is tokenised.
Easy Management: Manage your tokenised cards through a dedicated portal. View them, delete them, or create new ones whenever your card changes, renews, or gets reissued.
Multi-Device Compatibility: Tokenisation works seamlessly across various devices, including phones, tablets, laptops, wearables, and even smart home devices.
Personalized Limits: Set transaction limits for each tokenised card, adding an extra layer of control over your spending.

By embracing Tokenisation, you gain peace of mind knowing your card information is protected, allowing you to shop online with confidence.

Understanding card tokenisation in India: A secure payment method

Card Tokenisation is a security measure gaining traction in India, offering a safer way to conduct online and in-app transactions. This process replaces your actual 16-digit card number with a unique identifier called a token. This token, generated by recognized payment networks like Visa, Mastercard, Amex, and Rupay, acts as a shield for your sensitive card information.

Here’s a breakdown of how card Tokenisation works in India:

Initiating Tokenisation:

Merchant participation: Merchants seeking to offer Tokenisation must be compliant with regulations and partner with payment networks.
Customer consent: You, the cardholder, have complete control over Tokenisation. Your explicit consent through an additional factor of authentication (AFA) is mandatory before initiating the process. This ensures you are aware of and approve tokenizing your card.

The Tokenisation process:

Requesting a Token: Upon your consent, the merchant securely transmits your card details to the relevant payment network.
Token generation: The payment network generates a unique token specifically linked to your card, the merchant, and the device used. This token replaces your actual card number for future transactions.
Bank approval: Your card issuing bank reviews the token request and, upon approval, authorizes its use for future transactions.

Benefits of Tokenisation:

Enhanced security: By eliminating the need to store sensitive card information, Tokenisation significantly reduces the risk of data breaches and unauthorized transactions.
Convenience: Once tokenised, you can enjoy faster and smoother checkout experiences with participating merchants, eliminating the need to re-enter your card details each time.

Important Note:

Tokenisation requests are strictly registered only after receiving your explicit consent through AFA. Merchants cannot pre-select or default to Tokenisation options, ensuring complete control over your financial information

By understanding card Tokenisation, you can make informed decisions about securing your online transactions while enjoying a more convenient payment experience.

FAQ’s

What is Tokenisation?

Imagine using your credit card online without revealing its actual number. That’s Tokenisation! It replaces your 16-digit number with a unique, meaningless token, protecting your card details during online transactions. Think of it like a secure nickname for your card.

What is credit card Tokenisation?

Credit card Tokenisation applies this same principle specifically to credit cards. When you tokenize your card, a unique token is generated and linked to your card information. This token stands in whenever you make online purchases, shielding your actual card number from merchants and potential fraudsters.