RBI tokenisation rule after Dec 31: What it is? Why CII said online merchants can lose up to 40% revenues

Industry body CII has said that online merchants can lose up to 20-40 per cent of their revenues after December 31 due to tokenisation rule.

After Dec 31, 2021, online merchants will not be able to store card information of users. They will have to replace each card number with a randomised token number. 

This was brought out at a virtual session on 'Digital Payments and the India Media Consumer' which was organised by CII's Media and Entertainment Committee, as per a PTI report.

What is tokenisation?

-From January 1, merchants will not be able to store card information of users and will have to replace each card number with a randomised token number.

-India has an estimated 98.5 crore cards, which are used for about 1.5 crore daily transactions worth Rs 4,000 crore, CII said.

Indian digital payments industry

-The value of the Indian digital payments industry in 2020-21, as per the RBI's annual report, was Rs 14,14,85,173 crore, it said adding that digital payments have triggered and sustained economic growth, especially through the trying times of the pandemic, says the PTI report.

Tokenisation solution

- For a tokenisation solution to be consumer-ready (i.e. For consumers to be able to complete transactions successfully using tokens instead of their card information), the solution should have completed three steps, CII said.

- The steps include token provisioning and token processing and scale-up for multiple use cases.

(With PTI inputs)