Saturday, 28 January 2023

RBI extends tokenization of card deadline to 30th June 2022

RBI extends tokenization of card deadline to 30th June 2022

The RBI on 23rd December extended the deadline for card tokenization till 30th June 2022.

"The timeline for storing CoF data is extended by six months, i.e., till 30th June 2022; post this, such data shall be purged," the central bank said in its circular, directed to all payment system operators.

In addition to tokenization, industry stakeholders may devise alternate mechanisms to" handle any use case (including recurring e-mandates, EMI option, etc.) or post-transaction activity (including chargeback handling, dispute resolution, reward / loyaltprogramme, etc.)" that currently requires storing card data (CoF) by entities other than card issuers and card networks, the RBI further noted.

The earlier deadline set by the Reserve Bank was set to expire on 31st December 2021. Moneycontrol had reported on 21st December that the banking sector regulator is likely to push the deadline amid apprehensions raised by the stakeholders.

Earlier, the industry camp of banks, (IBA) Indian Banks Association, had made representation to the RBI to extend the tokenization deadline. And, some banks too had approached the regulator pursuing an extension.

"Banks are ready and prepared, but the main problem is with other stakeholders, mainly small and mid-sized merchants," a source familiar to the development had told Moneycontrol.

RBI extends tokenization of card deadline to 30th June 2022 1Twitter image: @RBI

Read More: RBI set GDP growth rate at 9.5% FY22

RBI's push for card tokenization

Tokenisation refers to replacing debit and credit card details with an alternate code called a "token." A token is uncommon for each card, token requestor, and device. The token asker is the entity that accepts a request from a customer for tokenization of a card and passes a request on to the card networks for the supply of a corresponding token.

A tokenized card transaction is safer as the card details are not shared with the merchant during transaction processing. The cardholder can get the card tokenized by initiating a request on the app provided by the token requestor.

The token requestor will forward a request to the card's network, which, with the consent of the card issuer, will issue a token equal to the combination of the card, the token requestor, and the device.

Prior, the RBI had asked banks to check the level of preparedness at the entity level. As per people friendly with the development, the RBI has reached out to banks in recent weeks to ensure a smooth transition.

A senior official said

"The RBI wants banks to make sure the banking system is prepared for the new rules. The regulator continous is in touch with almost banks on this subject,"

While banks were confident of meeting the new norms and payment networks, merchants were not ready. Banks warned the regulator of potential chaos during consultations with the RBI as small merchants need more time for the significant shift.

Follow Us

Popular Post

Maharashtra SSC Board Result 2022 To Be Announced Tomorrow

Maharashtra SSC Board Result 2022 To Be Announced Tomorrow

Farhan Sayyed Jun 16, 2022 Politics

The MSBSHSE (Maharashtra State Board of Secondary and Higher Secondary Education) will announce the SSC, Class 10 exam result 2022 on Friday, June 17...