RBI unlikely to extend the deadline for card tokenization

The Reserve Bank of India (RBI) is unlikely extending the deadline this Friday for businesses to tokenize credit and debit cards. Despite a request by smaller retailers,  there has been no sign that the central bank will declare an extension past September 30, Banking and merchant sources said.

The general consensus, according to a banker at a state-owned bank, is that banks, card networks, and retailers are better prepared. As a result, the ecosystem's demand for an extension hasn't been particularly strong, and we haven't heard anything to suggest one either.

While banks and big businesses are largely ready for tokenization, smaller retailers worry that they can run into problems that cost them sales. Merchant organisations contacted the central bank to request an extension for the implementation.

Some business owners and lenders are worried that there might be a short-term decline in card-related transactions. When the previous deadline was drawing near, the same situation occurred. According to retailers, recurring payments had decreased by 10% to 15%. Since card information wouldn't be kept on merchant servers, what would happen if a goods were returned is another worry.  Analysts contend that tokenization is essential since by 2026, digital payments are predicted to total USD 10 trillion.

About Card Tokenization:  Tokenization is the practise of replacing credit and debit card information with a special code or token that enables payments without card information. The RBI established the standards in 2019, and since then, multiple deadline extensions have been made public. By October 1, businesses in India are required to delete all saved credit and debit card information from their systems.

How do you tokenize a card?: You will have the opportunity to tokenize your card by selecting the "secure your card" option when entering your credit and debit card information during checkout on an e-commerce merchant website or application. Simply authorise the tokenization using the OTP supplied to your registered email address or mobile number.

The card will be tokenized after completion. When you access the website or app, the last four numbers of the saved card will be shown, allowing you to identify your card.

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