Card Tokenization


    In News

    • The Reserve Bank of India (RBI) signalled that it would not extend the October 1, deadline for implementation for tokenization of card based payments.
      • This rule is applicable to all stakeholders except card issuers and card networks.

    What is Tokenization?

    • Tokenization refers to replacement of actual card details with an alternate code called the “token”, which shall be unique for a combination of card, token requestor (i.e. the entity which accepts request from the customer for tokenization of a card and passes it on to the card network to issue a corresponding token) and device (referred hereafter as “identified device”).
    • By initiating a request on the platform made available by the token requestor or entity, the cardholder can have their card tokenized. A token matching to the card details, the token requestor, and the device will be issued by the card network, such as Mastercard, Visa, RuPay, or American Express, with the approval of the card issuer. 


    • Tokenization not only aids in making the payment transaction experience more secure for the end user but also aids merchants in delivering a consistent user experience and higher transaction approval rates with speed and security. 
    • Since the actual card data are not given to the merchant during transaction processing, tokenized card transactions are regarded to be safer.

    Source: LM