Citing several operational challenges that will hamper the transition to the token-based payment ecosystem, industry organizations have raised concerns about the industry’s readiness for the RBI Directive on on-file card tokenization.
MPAI and ADIF have stated that “ecosystem readiness” is a sequential commissioning process with stable application programming interface (API) documentation for tokenized transactions.
The digital payments ecosystem is a long way from consumer-ready solutions and unless regulated entities comply, merchants will not be able to successfully process tokenized transactions, they said in the joint letter.
“In the scenario where banks are lax in preparation, the brunt of this will be borne by traders in the form of lost income – we envision income losses of between 20% and 40% as a minimum if this is so. the case, “said Sijo Kuruvilla George, executive director of ADIF.
In September, the RBI banned merchants from storing customer card details on their servers effective January 1, 2022, and mandated the adoption of CoF tokenization as an alternative to card storage.
Industry bodies have said that if implemented in the current state of readiness, the new RBI mandate could lead to major disruption and lost revenue, especially for traders.
“This lack of preparation will have an even deeper impact on recent digital payment users. The frequency and intensity of phishing attempts will decrease as full card details must be entered for each transaction, causing a significant increase in fraudulent transactions. irreversible, “said Vishal Mehta, chairman of the board. Consulting, MPAI.
Based on the set of guidelines that have been mandated by the RBI, sensitive customer information should be stored in the form of an encrypted “token” to help secure transactions.
These tokens then allow payments to be processed without disclosing customer details or allowing payment intermediaries to store customer data that could compromise security and privacy.
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