The Reserve Bank of India has allowed tokenization of debit, credit and prepaid card transactions to enhance the safety of the digital payments ecosystem in the country. By this means the regulator will allow the card details to be masked while a transaction is processed at the point of sales, QR codes and other payment modes.
The regulator has clearly said that additional factor authentication will still be applicable for tokenized card transactions. However, the RBI has opened up this mode of the transaction only for mobile phone or tablets and not for any other electronic devices.
What is Tokenization?
Tokenization will replace card details with a code, called a “token,” which will be specifically for the card, the token requestor and the device being used to pay. Instead of the card’s details, the token will act as the card at the point of sale (POS) terminals and quick response (QR) code payment systems. The goal of the process is to improve the safety and security of payments.