Reserve Bank of India to expand tokenization to electronic devices

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admin November 5, 2021
Updated 2021/11/05 at 3:46 PM

The Reserve Bank of India recently decided to broaden the scope of tokenization to encompass consumer devices such as laptops, desktop computers, wearables such as wristwatches and bands, and Internet of Things (IoT) devices.

Tokenization is the process of replacing actual card details with a unique alternate code known as a “token,” which is unique for each card, token requestor (i.e. the entity that accepts a customer’s request for tokenization of a card and forwards it to the card network to issue a corresponding token), and identified device. The merchant, the merchant’s acquirer, the card payment network, the token requestor, the issuer, and the consumer are usually involved in a tokenized card transaction. An entity other than those listed may, however, take part in the transaction.

Its goal is to improve the payment system’s safety and security. The Reserve Bank had previously let cardholders to use ‘tokenization’ services, which produce a unique alternative code for transaction purposes, on their mobile phones and tablets. In 2019, the RBI released guidelines on “Tokenization – Card Transactions,” allowing authorised card networks to provide card tokenization services to any token requestor who meets certain criteria. Prior to the new circular, the service was only accessible for interested cardholders’ mobile phones and tablets. Because the real card data are not shared with the merchant during transaction processing, a tokenized card transaction is deemed safer.

Authorized card networks hold actual card data, tokens, and other necessary elements in a secure fashion. The token requestor is unable to save the Primary Account Number (PAN), often known as the card number, or any other card information. Card networks must also certify the token requestor for safety and security in accordance with international best practises and globally accepted standards.

 

Source: The Hindu

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