Tokenization Of Credit Cards & Debit Cards, New Rule To Make Online Transactions Safer

Jan 12, 2019 By Admin

The Reserve Bank of India, in a revolutionary move allowed the tokenization of credit, debit card transactions on Tuesday, a move that will make online transactions using credit, debit card safer and will give a big boost to digital transactions in India.

How’s Your Data’s at Risk?

Credit cards are undeniably a vital component of the retail payment environment, and very few merchants can generate any significant revenue without the ability to accept them. While accepting cards is a crucial requirement for merchants, there are constant and increasing risks to handling credit and debit card data in its native format. For instance, cardholder data is susceptible to theft if it is stored in the merchant environment and used for analytics, loyalty programs, refunds and other back-office processes. Fortunately, using a tokenization solution produces tokens that can be used securely by the merchant as a valuable substitute for card numbers, enabling them to take advantage of the process optimization opportunities provided by this payment method.

Credit cards can be risky to merchants because thieves easily monetize them, and the merchants bear much of the risk of loss if the data is stolen, lost or exposed. In order to establish industry guidelines for handling credit cards, the Payment Card Industry (PCI) Council’s Data Security Standard (DSS) explicitly lists the requirements for protecting sensitive cardholder data. Using tokenization technology helps merchants decouple the value of customer intelligence from the previously unavoidable risk of handling cardholder data and accepting the associated compliance costs.

How Tokenization will reduce the Risk?

Tokenization reduces security risk by removing sensitive credit card data and replacing it with the tokens. When the first transaction with a particular credit card is performed through a merchant using a tokenization solution, the credit card number is sent to a tokenization vault. This vault then generates a unique token and maps it to the card number. Once this is done, the merchant does not need to present the credit card number again, and can use the unique card-based token instead for all business processes that would have been accomplished with the credit card. All subsequent transactions with that credit card will produce the exact same token, allowing merchants to track individual consumer spending behaviour.

Published by : RAKESH KANWAR & CO.
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