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Industry bodies hail RBI’s move to extend card tokenization deadline to June

Industry bodies hail RBI’s move to extend card tokenization deadline to June
24 Dec, 2021

Industry associations, representing fintech solution providers and tech startups, today heaved a sigh of relief after the Reserve Bank of India (RBI) had extended deadline for implementation of tokenization of cards for online transactions by six months to June.

The earlier tokenisation deadline of January 1, 2021, has been seen as a major tech integration hurdle, setting the entire payment ecosystem looking for a longer implementation timeline.

Read more: Major tech integration hurdles threaten to impede RBI's card tokenization move Tokenization refers to replacing sensitive information on a credit or debit card with an alternative code called token which is hereafter used for processing transactions.

The Payments Council of India (PCI) in its representation to the RBI, while seeking an additional time of six months for implementation, said in a statement that while the industry has made considerable progress towards this change, but a lot of work still needs to be done and hence the industry will use this timeframe to implement this solution in its entirety in compliance with the country’s central bank directives. 

Also read: RBI’s tokenization rules may cause breakdown of digital payments market 

“This will greatly benefit the ecosystem, in a seamless migration and also in building upon alternate mechanism(s) to handle various use-cases,” said Srinivasu MN, founder, Billdesk and Co-Chair of the BBPS committee at PCI.

“As an industry, we are firmly committed to achieving the RBI’s vision of enhanced protection of customer card credentials and have embarked on that journey,” he added.  

Concerns were looming large across all stakeholders in the payment ecosystem around the preparedness. Merchants were staring at a revenue loss as a result.

With the new timeline, the industry now looks at utilizing the next half a year to architect and implement solutions ensuring smooth migration for cardholders while enabling optimum security for storage.

“Ecosystem readiness is a sequential process, with bank readiness being the vital first link in the chain,” Alliance of Digital India Foundation (ADIF) said in a statement.

“Unless banks are compliant, merchants will not be able to successfully process tokenized transactions and have solutions consumer-ready,” it added.

Also read: NASSCOM urges RBI to enforce card-on-file-tokenisation in phases

ADIF appealed to the RBI to make an assessment of readiness across all the banks and make this information publicly available, adding that it is equally important that consumer education and awareness is given the required importance and not just the technical aspects related to the switch to tokenization.

Author

Moumita Deb Choudhury