Source: This post is based on the article “RBI permits card tokenization services” published in AIR on 26th August, 2021.
What is the News?
The Reserve Bank of India has permitted authorised card networks to offer card tokenization services to any token requestor in a bid to make card transactions more safe, secure and convenient for the users.
What is Tokenization?
- Tokenization refers to the replacement of actual card details with an alternate code called the “token”.
- The token will be unique for a combination of card, token requestor (the entity which accepts the request from the customer for tokenization of a card and passes it on to the card network to issue a corresponding token) and device.
How is the Tokenization process different?
Benefits of Tokenization:
A tokenized card transaction is considered safer as the actual card details are not shared with the merchant during transaction processing.