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<\/p>\nThe recent Reserve Bank of India (RBI) norms on tokenisation services, which will be offered by card networks, are likely to result in merchants and payment aggregators incurring a cost as they have to pay a fee to the networks.<\/p>\n
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The merchants and the payment aggregators, in turn, may pass on the cost to the customers.<\/p>\n
The norms, which were issued by the banking regulator released on September 7, allow card networks like Visa and Mastercard to offer the tokenisation service.<\/p>\n
Tokenisation is the process in which card credentials are de-identified by converting into randomly generated numbers called tokens.<\/p>\n
The RBI circular further said from January 1, 2022, no entity in the card transaction or the payment chain, other than the card issuers and \/ or card networks, are allowed to store the actual card data.<\/p>\n
Any such data stored previously will have to be purged.<\/p>\n
The tokenisation service will be provided by the card networks.<\/p>\n
The payment networks will do the back-to-back tokenisation with the card issuing the bank.<\/p>\n
Once the issuing banks and the network are ready and come out with the solution then the merchants will start integrating their system with the process.<\/p>\n
Tokenisation is currently done by payment aggregators free of cost.<\/p>\n
According to payment industry sources, the card networks plan to charge one time set up fee of $700, then there is record retrieval fee of $0.007 (that is every time the token is send for transaction) and also monthly storage fee of $6,000 for one million cards, $10,000 for 5 million cards and so on.<\/p>\n
There are over 63 million credit cards in India and over 906 million debit cards in India as of end of July 2021.<\/p>\n
“As PCI, we are confident of meeting the deadline after the networks come out with the solution.<\/p>\n
“The only issue is what kind of pricing mechanism – for every token generated – they [card network] are going to charge,” said Vishwas Patel, chairman Payment Council of India – an apex body representing companies in payments and settlement system.<\/p>\n
“If they charge heavily the entire system will fail. They have to make it cost effective to help RBI to make this possible,” Patel told Business Standard<\/em>.<\/p>\n Patel also said that the merchants and payment aggregators are likely to ask for user consent for tokenisation.<\/p>\n National Payment Council of India (NPCI), which operates Rupay payment network, is yet to provide tokenisation service.<\/p>\n Mastercard has said they are an early adopter of card-on-file tokenization and will work with all the stakeholders for a seamless rollout of the facility.<\/p>\n “Mastercard welcomes the Reserve Bank of India’s decision to permit card-on-file tokenisation services.<\/p>\n “By replacing sensitive payment credentials with digital tokens, a superior ecommerce experience is created which provides increased security and a frictionless consumer experience.<\/p>\n “Globally, Mastercard is an early adopter of card-on-file tokenization and continuously focuses on introducing technology that brings simplicity and safety to cardholders, every time they pay,” said Ravi Datla, vice president, Digital Products, South Asia, Mastercard.<\/p>\n “We will continue to work with our partner banks, merchants, payment aggregators, and other stakeholders towards the seamless rollout of card-on-file tokenisation services.<\/p>\n “If implemented well, this can prove as a game-changer towards strengthening the consumer trust and safety of the entire card-based payments ecosystem,” Datla added.<\/p>\n Mastercard and Visa, however, have not responded to a query on the pricing aspect.<\/p>\n Tokensisation by Visa is done by a solution called Cybersource while for Mastercard, there is Mastercard Payment Gateway Service (MPGS).<\/p>\n