Online payment method going to change from new year, industry upset due to RBI’s token system!

Reserve Bank of India RBI is going to give the option of token system to the customers from the new year. Under this, a unique optional code description will be generated instead of the original card details while making card payments. In this regard, industry sources and banks say that RBI’s plan to move towards ‘card token’ may affect many companies, especially e-commerce firms and food delivery firms. RBI had issued guidelines in March 2020 saying that merchants will not be allowed to save card details on websites. This decision was taken to promote data security. New guidelines came in September this year. Under this, companies have been given time till the end of the year to comply with the rules and give the option of tokens to the customers.

According to a Reuters report, tokenization is the process in which card details are converted into a unique code or token. All this is done by an algorithm. With this, the card details are protected while making online purchases.

RBI has ordered removal of saved credit and debit card data from the systems of companies with effect from January 1, 2022.

Merchants and bankers argue that they were not given enough time to comply with these changes. Exiting the token system would mean that customers would need to manually enter the card details every time they shop online. Because of this many customers can stop online shopping.

Sijo Kuruvilla George, head of the Alliance of Digital India Foundation, a New Delhi-based think-tank, said that merchants may face a revenue loss of around 20-40 per cent. It will have more impact on smaller firms.

Senior officials of state-owned banks and private lenders said they were concerned that the move would lead to a significant drop in card transactions and increase in cash payments.

One banker said that not all banks will be ready for this by January. If yes, then you can opt for one-step cash on delivery to avoid any inconvenience. This will not only lead to a drop in card payments, but will also increase the circulation of cash, which is a matter of concern.

Credit card transactions in the country crossed the 1,00,000 crore mark in October. Other modes of digital payment have also seen a boom in the last few years.

An executive of an internet firm said the industry is not yet clear on how the cash back schemes and monthly-installment type card purchases would work. The Reserve Bank has been asked in this matter.

RBI did not respond to an e-mail sent for comment on the matter. Companies like Amazon, Flipkart, Zomato have also not sent a comment.

Industry executives say that even if some card networks, banks and merchants are ready, the process may take months to integrate and run smoothly.

Manas Mishra, chief product officer of payments firm PayU, said it may take another 6 to 9 months for the entire ecosystem to be ready for this.