From magnetic stripe to chip to tokenisation: How will RBI’s new measure make playing cards safer?


Customers of debit and bank cards face a variety of threats from fraudsters – like skimming, hacking, phishing and so on. To make the playing cards safe and safeguard the cardboard customers, the Reserve Financial institution of India (RBI) has taken a number of steps through the years with the development in applied sciences and alter in modus operandi of fraudsters.

The newest step taken by the RBI on this path is tokenisation, which seeks to interchange the cardboard numbers with tokens.

“Tokenisation is an idea launched nationwide by RBI to safeguard all card customers. RBI had earlier mandated that every one playing cards be upgraded to chip and pin extra from the magnetic stripe. RBI additionally mandated that every one playing cards require OTP for transaction authentication the place the cardboard shouldn’t be bodily used which is often known as “Card not current” transactions. In a current round RBI has disallowed utilizing auto-debit on playing cards for recurring fee transactions. Thus RBI has progressively launched security measures to guard card customers from potential dangers,” mentioned Balaji Jagannathan, Director and Founder,

Accustomed to utilizing the cardboard as it’s in shops and on on-line platforms, the prevailing card customers, nevertheless, could really feel uncomfortable, at the least initially.

“Tokenisation of playing cards is an easy, but highly effective mechanism for patrons to transact on-line utilizing playing cards safely. In the present day customers share their card particulars with eCommerce portals which these portals retailer of their entirety. Whereas many of those eCommerce suppliers retailer them safely, we now have seen that hackers gained entry to the cardboard particulars continuously. Tokenisation gives a standardised secure mechanism the place eCommerce suppliers can use a selected, designated third occasion to retailer the cardboard data. Shoppers needn’t present the total card particulars to the eCommerce suppliers anymore. As a substitute, they’ll share the corresponding token,” mentioned Jagannathan.

“The eCommerce suppliers will use the token to retrieve the cardboard data and full the transaction safely. As a consumer, it may be fairly unsettling to know that your complete card element is saved throughout a number of eCommerce servers and it could possibly probably fall within the palms of hackers or may be misused. Tokenisation gives a giant aid to the customers from this danger. Now customers may be pretty assured that their card data will probably be saved solely with authorized third occasion card tokenisation firms which might be particularly regulated and mandated to maintain the data secure,” he added.

Attributable to implementation points, the RBI had postponed the deadline of the tokenization rollout earlier. So, are the monetary establishments and the third occasion token suppliers prepared now?

“The banks or monetary establishments needn’t make any change to their present processes in an effort to assist tokenisation. The cardboard data storage and entry is a matter of interface between eCommerce suppliers and the third occasion tokenisation suppliers. The eCommerce portals want to make use of the token supplied by the consumer to resolve the cardboard particulars. As soon as that is carried out, the transaction can proceed as regular,” mentioned Jagannathan.

“The monetary establishments is not going to require any change to their IT infrastructure. In truth, our company clients as effectively don’t want any change to their IT infrastructure. When the eCommerce supplier identifies their third occasion tokenisation supplier, we are going to do a one-time integration. As soon as that is full, the whole resolution works seamlessly with none change to the shoppers’ expertise,” he added.

Speaking on the position of Paycorp within the tokenisation course of, Jagannathan mentioned, “Paycorp works with fee gateway suppliers that present card processing providers. These gateway suppliers have made the required course of modifications to resolve token data to card particulars. So all card funds processed by Paycorp will mechanically resolve the token to card data. Our clients will mechanically adjust to the rules.”

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