Tokenization Rules for Debit and Credit Cards. All you Need to Know

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Introduction 

2022 has seen a rising adoption of credit cards in India. Eying this rise in card usage, India's central bank, the Reserve Bank of India (RBI) has announced a new set of guidelines. These RBI new guidelines tend to protect consumers from fraud and hidden charges. Do you want to learn all about the RBI debit card guidelines & credit card guidelines? Well, in this case, read the blog post till the end.

What is Card Tokenization? 

Tokenization is the process of substituting the debit or credit card details with a token. This token is provided by the operating bank. So, whenever you pay for a product or service online, you need not enter the 16 digits issued on your card. The banks automatically issue a non-sensitive equivalent token for online transactions.

Credit Card tokenization in India is quite beneficial because your important and personal information will no longer be available on any merchant, Payment Gateway, or third-party platform. All token-based transactions are secure because no merchants or entities can now misuse the card details.

New Debit and Credit Card Rules: An Overview

The Reserve Bank of India – RBI has issued a new set of instructions for credit and debit cards. This set of guidelines count in standard operating procedures, and consumer protection in India.

According to the new tokenization rule, RBI has asked all operating banks to create tokens for card details. So, for any online sale and in-app transactions done by credit/debit cards, you will have to enter tokens issued by the banks.

The central bank of India has passed a list of guidelines & rules for banks & card issuers. The guidelines even include penalties. Credit card issuers have increased all of a sudden during the pandemic. Due to this, the rules issued on a credit card are more in terms of a debit card.

For enhancing consumer protection, the Reserve Bank of India has taken the step of tokenizing debit and credit cards. RBI's new guidelines for debit card & credit card is helpful especially to detect fraud, theft, and unauthorized usage.

Key Highlights for RBI Credit Card Guidelines 

• Credit cards shall be issued free of charge. There will be no hidden charges.
• Card issuers have the freedom to issue insurance cover for liabilities. The liabilities include lost credit cards, or credit card fraud. To avail of this benefit, you have to get direct permission from the cardholder.
• Credit card issuers will need a one-time password to activate a credit card that has been deactivated within 30 days from the date of issuance. When an unauthorized person impedes a card before its delivery to the customer, this guideline gets activated.
• Credit card information will no longer be communicated to any credit firms like Cibil & Experian, etc., before activating the card.
• There shall be 100% transparency in the conversion of credit card transactions into EMI. The bank needs to mention the amount of principal, interest, discount, and charges if any.
• EMI conversion with interest shall no longer be recognized as no-cost or zero-interest EMI.
• The credit card issuer has to write the reason for any credit card rejection.
• Consumer demand for closing existing credit cards shall be acclaimed within seven working days. If the credit card issuer fails to do so shall result in a penalty of ?500 per day of delay.
• If you don't use the credit card for 1 year, there shall be a card closure of credit cards.
• Any transformation in Credit card charges shall be indicated within 30 days before implementation.

Key Highlights of RBI Debit Card Guidelines

• From now onwards, Debit cards shall be issued to such customers who have a savings bank or current account.
• Debit card new rules include the following – Cash credit or loan account holders won't be allowed to issue any debit cards.
• No customer shall be forced to avail of a debit card by banks.
• Debit card issuers need not link holding a debit card to aid other facilities offered by the bank.
• Commercial banks shall issue Debit card factors like wearables.

How Do Tokenization Rules Work? 

From October 1, 2022, the card tokens issued during transactions shall be irreversible and unique. This new guideline cuts off the breaching security layers and translates the payment process to procure card details.

As per rbi new guidelines for debit cards and credit cards, the number of chargebacks, disputes, and fraud will be brought down. This will help the consumers, merchants, and banks.

Apply for a Card Token Now

The tokenization process includes many steps. They are as follows:

• Click on "securing your card as per RBI guidelines" a
• Enter all the card details for a transaction.
• The Bank merchant requests the operating bank to generate a unique token.
• The token is then issued for a particular transaction.
• You have to offer your consent and then the merchant will send the request to the card network. 
• You get an OTP on your mobile or email from the card issuer.
• Fill out the bank page & view the generated token.

NOTE: Remember, you will receive an email regarding the same token. You have to save the token in your phone and email address for future transactions.

Final Takeaway

So, this was all about Tokenization rules for credit and debit cards. These rules and regulations are set in order to provide you with safe and secure financial transactions. Follow these new RBI guidelines for future authorized and secure transactions.