RBI issued guidelines in March last year prohibiting merchants from saving card details of customers. Its purpose was to increase the security in online transactions. In September this year, RBI had expanded the scope of its guidelines on card tokenization. RBI had said, “Tokenization of card data will be done with the explicit consent of the customer and will require Additional Factor of Authentication (AFA).”
The deadline for e-commerce companies, other payment aggregators and merchants to store card information was initially fixed till June 30 this year. This was later extended to 31 December and now RBI has extended it till 30 June next year. Tokenization helps in replacing the card details with a unique algorithm generated code or token. This allows online purchases to be made without revealing card details.
Customers will not be able to save their debit or credit card details on any e-commerce platform from July 1 next year. They will have to re-enter the card details every time they do an online transaction. Customers can give consent to e-commerce companies to tokenize their cards. After getting the consent of the customer, the e-commerce company will ask the card network to encrypt the details with additional factors. Once the encrypted details are received by the e-commerce company, customers will be able to save their cards for transactions. Due to increasing incidents of fraud in online transactions, RBI has issued new guidelines to make transactions more secure. With this, customers will not have the possibility of theft of card details when making online purchases.
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