How safe is card tokenization?

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Published on October 8th, 2022

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Table of Contents

Introduction

It was on January 1, 2022, that the rules and regulations on credit or debit cards while shopping changed. Customers now need not save the 16-digit card number and the card expiry date on the merchant’s website. RBI is now vouching for a tokenized transaction for a safe and transparent transaction. A tokenized card transaction is considered way safer as the actual card details are not being shared with the merchant during transaction processing.

What is Card Tokenization?

RBI introduced a process called ‘card tokenization’ to protect domestic card transactions. Tokenization preserves your card details so that it is no longer with merchants like apps, websites, payment processors, or banks. With card tokenization, you need not remember your card details each time you shop. All you have to do is enter the CVV and shop/book tickets/travel portals within seconds.

Today, online frauds and cyberattacks create complications in the adoption of digital payments. Tokenization of debit cards adds an extra layer of security to users’ sensitive data. This prevents online and digital data breaches. Tokenization is a feature that makes repeated shopping easier and quicker. Tokenized card management is quite handy. The bank provides you with a portal to view/delete tokens for your respective cards.

Is Card Tokenization India Safe?

Yes, card tokenization is safe because it enhances card security for the customer. It cuts off the surface area of risk. The Tokenization of debit cards is the future of card payments. The success rates of card transactions depend on tokenization. It offers better success rates, user experience, issuer visibility, and enhanced lifecycle management.

Card Tokenization India was always the future of card payments. The vault in a token is tied to the real account number. This helps the data remain secure during any transaction. The ‘vault’ supports a guarded database to match the tokens with original card information.

Why is Tokenization Important?

Digital platforms are the most suitable and preferred platforms to avail of online services and purchase products/services. This increased frequency of online transactions conveniences customers to save their payment information on merchant sites. This means that your payment partners have access to sensitive financial data. If you hadn’t used digital platforms, these datasets would be highly personal.

For securing personal data, customers, merchants, and banks, RBI prevents merchants from storing debit and credit card details on their servers. Debit card tokenization is a convenient alternative to card storage. Due to this process, the user’s sensitive card information is replaced with a non-sensitive code – ‘Token’.

Benefits of Card Tokenization

Now that you know that card tokenization is safe, let us learn some benefits of tokenizing debit cards.

1. Better Safety and Security

Mastercard tokens are unique to a single card for every particular merchant. This feature of tokenization supports overall security while making card-based transactions. Debit card users can now easily use the card without permitting merchant sites to store personal card details online.

You must tokenize your cards. As soon as your card is tokenized, you will be able to see the last four digits of your card. In case your debit card is replaced, renewed, upgraded, or reissued, you have to recreate a new token for transactions on the merchant sites.

2. Eliminating False Declines

An authorized/legal online payment might get declined irrespective of the card being valid. This is because your card transaction might appear like a fraud. All thanks to debit card tokenization! False declines are no more an issue. The card token used for making payments confirms the security of the highest order.

3. Faster Checkouts

Your tokenized debit card allows you to execute quick checkouts. Because, here, you need not punch in your card number for every single purchase. All you need to do is save your card once and enjoy easy & fast transactions at all times.

4. Easy Card Management

Mastercard tokenization helps you maintain track of all your cards and the merchants you have been tokenized with. Thus, it is not only safe but also easy.

5. No Necessity for a Physical Card

Debit card tokenization helps customers store a virtual version of their cards on their smartphones. So, you can now remember the card details quite easily. You don’t have to carry the physical card with you in your purse.

Tokenization also has an added benefit, i.e., cashback. You can now secure your cashback coupons on platforms like Amazon, Paytm, Flipkart, PhonePe, etc.

Card Tokenization: Working Procedure

When you check out on an online shopping portal, you have to use card tokenization. Just fill in your card details and select tokenization. The card details are automatically forwarded by your merchant. Your bank or the card networks (VISA, Rupay, Mastercard, etc) receives the details. Very soon, a token is generated which reflects on your r merchant. The token is saved on the merchant for users.

Whenever you visit the same shop for shopping, just choose this saved token at check-out time. You shall be able to see the same masked card details and the last four digits of your card number. Just enter the CVV and complete the transaction.

Credit Card Tokenization Examples

Credit card tokenization works through every modern channel. For example, in e-commerce channels & mobile applications.

Below, we have highlighted 2 credit card tokenization examples.

1. E-commerce

Merchant firms that use web stores or online applications for product/service payments benefit from tokenization. Ecommerce tokenization is designed to minimize PCI compliance scope, particularly for the customers. Google token is an important credit card tokenization example.

2. Mobile

Organizations prefer using tokenized cardholder data stored on mobile applications, android, or iOS devices. Tokenization helps mobile applications collect credit card data from both native and web-based transactions. This helps reduce risk & industry compliance.

Final Takeaway

We can safely conclude that tokenization is highly safe. It is a card token that supports secure and fast digital payments. You can also tokenize your card and add an extra layer of security to your debit card. Remember, very soon this upgraded security in digital payments shall benefit the entire globe for digital payments and transactions.

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