The Reserve Bank of India’s (RBI) decision to allow card payment providers to offer tokenisation services will ensure the safety of digital transactions and reduce chances of fraud.
Tokenisation involves a process in which a unique token masks sensitive card details like card and CVV number. The token is used to perform card transactions in contactless mode at Point Of Sale (POS) terminals, Quick Response (QR) code payments, etc.
Global mobile payments are expected to top $3.3 trillion by 2024. Tokenisation is expected to increase digital transactions in India.
The way the token will work is like this — the debit or credit card holder will create a code for a particular amount, say Rs. 500, through an app in the form of a number. That number will have the amount that can be spent, the merchant type where it can be spent as well as time within which the transaction needs to be completed. Then the number can be shared with the merchant who will enter it in the mobile, to get the payment for the items sold.
Because there is no need to enter card number, CVV, expiry date etc online, there is no risk at all for digital payments.
Source: The Hindu