Card networks and payments platforms are confident of integrating card-on-file tokenisation ahead of the September 30 deadline, but merchants believe they need more time to test its operationality.

“Card networks and issuers have taken their time, and are now saying they’re ready so close to the deadline. Without large-scale testing, we don’t know if the systems are ready,” said Vishal Mehta, member of the Merchants Payments Alliance of India (MPAI).

“We have asked that merchants be treated separately from the payments ecosystem. The September 30 deadline makes sense for the ecosystem, but merchants should have another three months,” he added.

Several merchant associations have sought an extension of 1-3 months to test, verify and certify the tokenisation mechanism. However, the regulator has so far not responded.

Testing is especially needed for nuanced use cases such as recurring payments, cashbacks and refunds, which seem to be more problematic than regular one-time transactions, which are expected to stabilise within 10-15 days.

Several small merchants, which rely on payment aggregators to process their subscriptions, don’t have visibility on how many subscriptions could drop, because testing these require the completion of at least a one month cycle, said industry participants.

Aruna Sharma, former IT Secretary, at a recent event said there is lack of clarity around post-transaction activities such as settlement, guest check-out and number of transactions per second. Hasty implementation could then result in a shift to traditional payment methods.

Need for testing tokens

So far, the readiness of card networks and payment platforms has been in their own silos, but when tokenisation is introduced for the entire ecosystem, the sheer volume of transactions could lead to the first 4-6 weeks being very tough.

“Even if 1 per cent of transactions fall through, it will be a huge loss,” said a person with knowledge of the online payments ecosystem.

“Till the parties are on the same page, start speaking the same language, and the merchants, networks and payments can start integrating with each other, it won’t be effective,” they added, citing the impact of the ‘e-mandate’ mechanism —introduced over nine months ago — which is still being felt by the industry.

Effective testing can only be done post implementation because only then can stakeholders identify and rectify any roadblocks. Further, concerns also pertain to this being a critical time, in terms of both higher festival shopping by consumers and inventory liquidation by merchants.

Failed transactions during this period could lead to capital being stuck and pose several challenges, an industry person said, with another adding that till Wednesday, one of the major card networks did not have a solution for refunds and cashbacks for token transactions.

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