RBI to allow and enable Tokenization of Card Transaction

RBI to allow and enable Tokenization of Card Transaction - Background Context

The Reserve Bank of India has allowed tokenization of debit, credit and prepaid card transactions to enhance the safety of the digital payments ecosystem in the country.

RBI to allow and enable Tokenization of Card Transaction

RBI has approved and banks has been offered the consent for the operations using all varieties of payment services and payments methods such as magnetic secure transaction (MST), near-field communication, in-app purchase methods and cloud based payment services.

What is Tokenization ?

The Tokenization will substitute the card details with a code, popularly known as “Token”. This change is for the use of the cards as mode of payment. Earlier while card were used as mode of payment, the card details were shared and exchange for the authorization of the transaction at point of sale (POS) terminals, this will be changed and instead of card details, the “Token” will be used to authorize and validate the card at POS and QR payment systems. The primary objective behind of Tokenization of Transaction is improvement in payment system for better security.

Important Links (External)

  1. Tokenization – Card transactions - Reserve Bank of India (RBI).
  2. RBI releases guidelines on Tokenization - Card Transactions.
  3. RBI releases guidelines for tokenization of card transactions.

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