Photo: Pradeep Gaur/ Mint
Photo: Pradeep Gaur/ Mint

Using credit, debit cards may now be safer

  • RBI has encouraged the use of tokenisation for debit cards, credit cards and prepaid cards
  • The new move will provide more security in card transactions 

Mumbai: Not everyone is comfortable making transactions using credit card and debit cards on a regular basis.

In order to provide more security in card transactions, the Reserve Bank of India (RBI) has encouraged the use of tokenisation for debit cards, credit cards and prepaid cards. Let’s take a look at how it is going to impact you.

Tokenisation for free

Tokenisation involves a process in which a unique token masks sensitive card details.

Instead of the actual card details, a token is used to perform card transactions in contactless mode at point of sale (POS) terminals and quick response(QR) code payments.

“A card holder may avail of these services by registering the card on the token requester’s app after giving explicit consent. No charges shall be recovered from the customer for availing this service," the apex bank stated. Not everyone is comfortable sharing card details even if there is a one-time password.

“Tokenisation converts details to another digit and is then read by the system. Therefore, your card details remain secure. All the details will be replaced by tokens and it can take various forms. You share token and not card details," said Sanjeev Moghe, executive vice president and head, cards and merchant acquiring business, Axis Bank Ltd.

What it means for you

Nothing actually changes for you. However, the tokenisation of credit, debit and prepaid cards will change things from the bank’s point of view.

“In the US, no actual card number travel but a token is generated to send to the issuer. With tokenisation, the independent entity can go to the payment network to issue tokens and process the transaction," said Jitendra Gupta, managing director at Payu India.

The customers life will not really change significantly, said Gupta.

However, there can be other business use for this. Facilities such as tap-and-pay can be developed for mobile phones," Gupta added.

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