The Merchant Payments Alliance of India (MPAI) and the Alliance of Digital India Foundation (ADIF) urged the Reserve Bank of India (RBI) on Wednesday to extend the December 31 card-on-file (CoF) tokenisation deadline for merchants.

The industry bodies expressed concerns about the industry's readiness for the RBI directive on card-on-file tokenization, citing several operational challenges that will impede the transition to the token-based payments ecosystem. According to MPAI and ADIF, 'ecosystem readiness' is a step-by-step process of launching stable API (application programming interface) documentation for tokenized transactions.

The digital payments ecosystem is still a long way from consumer-ready solutions, and merchants will be unable to successfully process tokenised transactions unless regulated entities are compliant, according to the joint letter.

"If banks are lax in their preparedness, the brunt of that will be borne by merchants in the form of revenue loss - we are looking at revenue losses of anywhere between 20-40 percent at the very least should that be the case," said Sijo Kuruvilla George, Executive Director, ADIF. The RBI banned merchants from storing customer card details on their servers beginning January 1, 2022, and mandated the use of CoF tokenization as an alternative to card storage.

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