Last year, the Reserve Bank of India (RBI) issued guidelines prohibiting merchants from storing card details of customers on its platform. The idea was to provide a safe and secure shopping experience. In line with the same, RBI in September announced new guidelines for customers transacting online on any e-commerce platform.
As per the new rules, customers will have to enter their debit and credit card details at every checkout as their card details will no longer be saved on these platforms. However, a way to avoid the hassle of adding card details to every transaction would be solved through tokenization.
The new RBI rule states that “the tokenization of card data will be done with explicit customer consent, which will require Additional Factor of Authentication (AFA).” In simple words, tokenization is a unique algorithm-generated code or token for your card details. The token will allow customers to make easy payments on these platforms without revealing card details.
Let’s take a look at how online transactions will change from January 1, 2022.
How Online Transactions Are About to Change: 10 Points
- With effect from January 1, 2022, customers will not be able to save card details on any e-commerce platform including Amazon, Flipkart, Swiggy, Zomato, or any other.
To transact online, customers need to enter their card details every time an order is placed.
-To avoid the hassle of entering card details in each order, customers can tokenize their cards. To use this facility, you need to give consent to the e-commerce platform to tokenize your card details. Once you give the approval, the e-commerce platform will ask the card network to encrypt the details with additional factor authentication.
Once the e-commerce platform receives the encrypted details, customers will be able to store that card for future online transactions.
-It should be noted that for now only MasterCard and Visa cards can be tokenized. Reportedly, other financial services should also be able to launch tokenization.
The new RBI guidelines should be applicable for both credit and debit cards.
The new rules are only for domestic transactions and not for international transactions.
-If you are wondering that the customers will not have to pay any extra charges for the tokenization of the card.
Once the token is generated, the e-commerce platform will display the last four digits of the token card, the name of the bank and the name of the card network. This will allow customers to identify them for easy identification.
It is to be noted that the tokenization of the card is not mandatory and the customer can choose to enter the card details every time he transacts online.
Post Explained: Here’s How Your Online Transactions Will Change From January 1 This first appeared on BGR India.