Home / Money / Personal Finance /  New RBI rules for online payments from 1 January. What it means for debit, credit card holders
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Come January 1 and the new rules for online payments through debit, credit cards will come into force. So, while shopping on any online platform such as Flipkart, Amazon, Myntra, your 16-digit card number along with the card’s expiry date will not be saved on the website. Instead, you will have to make the card payment through the process called ‘tokenisation.’

RBI guidelines on card tokenisation

RBI issued fresh guidelines in September 2021 giving companies until the end of the year to comply with the regulations and offering them the option to tokenise. The RBI has ordered all companies in India to purge saved credit and debit card data from their systems from January 1, 2022.

Card tokenisation

Tokenisation is a process by which card details are replaced by a unique code or token, generated by an algorithm, allowing online purchases to go through without exposing card details, in a bid to improve data security.

What debit,credit cardholders need to do from 1 January 2022

  • You start a purchase with a merchant.
  • The merchant initiates tokenisation by asking for your consent to tokenise the card.
  • Once, you give consent, it sends a tokenisation request to the card network.
  • The card network creates a token as a proxy to the card number and sends it back to the merchant.
  • For making payment to a different merchant or from a different card, tokenisation is to be done again.
  • The merchant saves the token for subsequent transactions.
  • You approve transactions with CVV and OTP

Why are merchants and bankers worried?

Merchants and bankers argue they have not been given enough time to comply with the changes while opting out of tokenisation would mean a customer would need to manually key in their card details each time they completed an online purchase, which could put some customers off, Reuters reported.

"Not all banks are going to be ready by January and even if they are, it is likely that to avoid inconvenience, customers may opt for a one-step cash on delivery, instead of keying in details," Reuters quoted a banker with a leading Indian lender, who asked not to be named.

"So not only will card transactions decline but cash in circulation will also go up, which is another concern."



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