Tokenisation: Benefits, registration, charges and other details; Here is what RBI says

One can perform financial transaction via various modes like cash, cards, digital modes, among others. Now the use of token is also gaining pace.

According to the Reserve Bank of India (RBI), tokenisation refers to replacement of actual card details with an alternate code called the “token”, which shall be unique for a combination of card, token requestor (i.e. the entity which accepts request from the customer for tokenisation of a card and passes it on to the card network to issue a corresponding token) and device.

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Here is all you need to know about tokenisation:

1. Benefit: As per the information provided by the RBI, a tokenised card transaction is considered safer as the actual card details are not shared with the merchant during transaction processing. Tokenisation has been allowed through mobile phones and / or tablets for all use cases / channels (e.g., contactless card transactions, payments through QR codes, apps etc.)

2. Charges: There is no need not pay any charges for availing this service.

3. How does the process of registration for a tokenisation request work: The registration for a tokenisation request is done only with explicit customer consent through Additional Factor of Authentication (AFA), and not by way of a forced / default / automatic selection of check box, radio button, etc. Customer will also be given choice of selecting the use case and setting-up of limits.

4. How can tokenisation be carried: The card holder can get the card tokenised by initiating a request on the app provided by the token requestor. The token requestor will forward the request to the card network which, with the consent of the card issuer, will issue a token corresponding to the combination of the card, the token requestor, and the device.

5. Who can perform tokenisation and de-tokenisation: Tokenisation and de-tokenisation can be performed only by the authorised card network. The list of card networks authorised by RBI to operate in India is available on RBI website at the link https://www.rbi.org.in/Scripts/PublicationsView.aspx?id=12043.

6. Who are involved in a tokenisation transaction: Normally, in a tokenised card transaction, parties / stakeholders involved are merchant, the merchant’s acquirer, card payment network, token requestor, issuer and customer. However, an entity, other than those indicated, may also participate in the transaction.

7. Limit on the number of cards that a customer can request for tokenisation: A customer can request for tokenisation of any number of cards. For performing a transaction, the customer shall be free to use any of the cards registered with the token requestor app.