From January 1, 2022, under the new guidelines of the Reserve Bank of India (RBI), e-commerce companies such as Amazon and Flipkart or online delivery coordinators such as Zomato will not be able to store card information on their sites. Under the new rules, customers who make online transactions on any e-commerce site will have to enter their debit or credit card details every time starting next year. However, customers can opt out of approving platforms to tokenize their cards, avoiding the hassle.
In March 2020, the RBI issued guidelines restricting merchants from storing customers’ card details to increase security. In September this year, the regulatory body updated its guidelines on card tokenization services to enhance security and security. “The tokenization of card data must be done with the explicit customer approval that requires additional factor recognition (AFA),” the RBI said in a statement.
Tokenization allows you to exchange card details with a unique algorithm-generated code or token, which allows you to make purchases online without disclosing card details.
So, what does this mean for the regular customer? Here are 10 quick takeaways:
- From January 1, 2022, customers will no longer be able to store their debit or credit card details on any e-commerce site.
- Customers have to re-enter the card details every time they make an online transaction.
- To avoid further hassle, customers can give their approval to e-commerce companies to “tokenize” their cards. After obtaining customer approval, e-commerce sites will ask the card network to encrypt the details with additional factor authentication as required.
- Once the e-commerce platform receives the encrypted details, customers can store that card for future transactions.
- Currently, most leading e-commerce sites can only tokenize MasterCard and Visa issued cards. Cards of other financial services are expected to be tokenized soon.
- New RBI guidelines for credit and debit cards must be strictly adhered to.
- The new guidelines do not apply to international transactions. Only domestic cards and transactions will fall within the scope of the new RBI guidelines.
- Customers do not have to pay any extra fee for tokenization of cards.
- E-commerce platforms display the last four digits of tokenized cards, along with the name of the issuing bank and card network, for easy identification by customers.
- Lastly, the tokenization of the card is not mandatory. Customers can choose to tokenize their cards or otherwise enter card details to make quick transactions.
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