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16/09/2021 - Indian Economy

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September 16, 2021

Card Tokenization can enhance customer confidence on digital payments, also making payment transaction convenient. Elaborate (200 Words)

Refer - Financial Express

Enrich the answer from other sources, if the question demands.

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IAS Parliament 3 years

KEY POINTS

·        Tokenisation is a process of replacing sensitive data with non-sensitive data. In payments cards industry, it is typically used to replace cardholder’s card number (i.e., PAN) with a surrogate value called a ‘token’.

·        Tokenisation provides for both convenience and security of payment transactions. The concept has been widely adopted in the payment card industry globally.

·        The increasing adoption of digital payments begets demands for further improving convenience, resilience, security, real-time and cost.

·        Multiple methods of tokenisation exist within payments and vary depending on the parties in the payment ecosystem (merchants, acquirers, card networks or issuers).

·        In merchants’ or acquirers’ tokenisation method, sensitive card information is stored in a secured vault and a token is used for processing payment transactions within their environment.

·        Tokenisation can be implemented using a variety of storage mechanisms viz. device-based, cloud based, app-based and card-on-file (CoF) and payment channels like NFC, MST, in-app, QR code, etc.

·        RBI laid down directions for card tokenisation whereby, as an initial step, card-network-enabled tokenisation was allowed through mobile phones and tablets.

·        The new extension has enabled the industry to offer tokenisation service benefits of enhanced security, reduced fraud risk and less payment disruption (also read dropouts) across a wide variety of use cases.

 

Nivetha 3 years

Please review

IAS Parliament 3 years

Try to provide specific examples, avoid writing generalized points. Keep Writing.

Manish 3 years

Please review..

IAS Parliament 3 years

Try to include data to support your arguments. Keep Writing.

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