Tokenisation, the safer way for online payments

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These days, when you make online payments, all websites ask you to opt for ‘Secure Your Card’  through pop-up messages.  Whether you are buying household items or clothes, all kinds of e-commerce platforms are sending you such pop-up messages . This message means that you make a token of your debit or credit card on that online platform. Token is a secret 16 digit code which will be your financial identity.

So far, whenever you ordered goods online, the shopping website used to auto save your card. The biggest danger was that if the company’s website was hacked, then, it increased chances of fraud manifold. But now the RBI has told all online companies that they cannot keep any data of the consumer’s plastic money. Such information are  card number, card verification value i.e. CVV and expiry date. The data already saved will have to be deleted and all future transactions will not be from the card but from the token number issued against the debit or credit card.

Merchant i.e. the company’s platform on which you shop with your card will issue a token to the customer. But the merchant will not create tokens. RBI authorised card network providers like Visa, Mastercard, RuPay and Razorpay will issue tokens. Let’s understand the whole process. The consumer lands on the merchant’s platform to buy something. He will request issue of token to the merchant. The merchant in return will forward his request to the authorized payment gateway.  A token of the combination of merchant and card numbers will then be issued.  When you shop from platform A, there will be a separate token for it. Platform B will have a separate token, similarly there will be a separate token for each merchant.

Online payments have increased significantly since the Coronavirus pandemic. Most people are using debit cards and credit cards. Online payments have increased and online frauds are also on the rise. To prevent such types of frauds, a virtual identity i.e. token of all credit and debit cards will be created. At the time of making transaction, your credit and debit card number will not be stored with the merchant. Only the token number will be stored. There will be a separate code for each transaction.

The token will help in making payment without disclosing the customer’s information. While making online payment, card details will not have to be filled in. The transaction will be completed through CVV and OTP. No extra charge will be charged from the customer for this token.

What if you don’t opt for tokenisation? If the token is not issued in lieu of the card number, that is, if you do not approve tokenization, then, what will happen? Then every time you make online payment you will have to feed in the 16-digit card number, the cvv and the expiry date. Only then would the transaction be complete.