Tokenisation: Industry better prepared but some glitches remain ahead of June 30 deadline

With less than a month left to meet tokenisation norms for card transactions, banks and payment players seem to be better prepared than six months ago but glitches remain.

At least a few card issuing banks, particularly public sector banks, are still working on the tokenisation infrastructure and may take time even as majority of the card acquiring banks are ready.

So, card-based payments to at least some international merchants and small merchants could be impacted. Tokenisation refers to the process where the actual card data is replaced by a token.

“The industry is far better prepared than it was six months ago in December. From an overall industry standpoint, Visa, Mastercard and NPCI are already ready with the card on file tokenisation.

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“Most acquiring banks are ready with tokenisation. But not all issuing banks are prepared with tokenisation and generating tokens for their cards,” said Dewang Neralla, CEO, NTT DATA Payment Services India.

Similarly, while about 70 to 80 per cent of the larger merchants are ready, about half the small and mid-size merchants are yet to get their infrastructure in place. A lot of international merchants will also be impacted, Neralla said.

“Tokenisation requires a lot of systems and processes to be put in place. Many banks are still working on it,” said a senior executive with a public sector bank, adding that there are at least some discussions on whether to seek a fresh extension from the Reserve Bank of India.

The RBI had given a six month extension in December 2021 for complying with card tokenisation norms. The new deadline falls on June 30.

The aforementioned extension was the second one given by the RBI as it had initially set the deadline as June 30, 2021. The RBI had in March 2020 stipulated that authorised payment aggregators and the merchants onboarded by them should not store actual card data.

Major banks such as HDFC Bank, ICICI Bank and players such as SBI Cards as well as Visa, Mastercard and NPCI are ready to meet the norms. A number of merchants have also begun to seek consent from customers to tokenise their card data.

Razorpay said it has already tested processes with Visa, Mastercard and Rupay and is fully ready.

“Diners Club has recently gone live on our platform and American Express will launch on our tokenisation platform soon,” said Khilan Haria, VP and Head of Payments Product, Razorpay.

“Our merchants are fully prepared for tokenisation and more than 90 per cent of card networks and issuers are also ready with tokenisation,” he said.

Reeju Datta, Co-Founder, Cashfree Payments, said the industry is more prepared than it was in December, particularly on the acquiring side. Cashfree Payments was among the first few players in the industry to go live with its tokenisation solution in December 2021.

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