India has issued around 560 Mn card tokens since October last year, following the Reserve Bank of India’s directive to tokenise cards for ecommerce transactions, global payments operator Visa said in its new report.
However, according to The Economic Times, the report, set to be released, states that out of these Visa has issued around 300 Mn tokens.
The report titled, “Enabling the Digital Shift: Tokenisation in India’s Economic Landscape”, forecasts that India’s gross transaction value of digital payments will reach $5.2 Tn by 2030, growing at a compound annual rate of 14%. It also underscored a significant rise in cases of cyberattacks from 0.2 Mn in 2018 to 1.3 Mn in 2022, so card tokenisation has been implemented for the rescue of the consumers.
The reason behind the central bank’s move to tokenise credit and debit cards was to curb access of the customers’ unique card numbers by ecommerce merchants.
Card schemes such as Visa and Mastercard convert this card number into a set of random tokens. This ensures that even if a fraudster steals customer data from the merchant site, the unique card details remain secure.
Visa has predicted that India would reach the 100 Mn credit card mark by the end of 2023, from 93 Mn as of September.
As per ET, the report reveals that Visa anticipates a future for tokenisation where use cases such as transit payments and payments via smartphones and wearables will gain traction. The broader application of tokenisation is expected to streamline payments, diminish fraud, and enhance the business-to-business payment experience, among other benefits.
“As the country pushes towards a digital economy with an increasing volume of transactions, tokenisation has immense potential to further digitise the payment ecosystem. With a substantial 560 Mn tokens already in circulation and a fast-paced growth rate, we foresee tokenisation becoming a pivotal force in the evolution of digital payments,” the report cites RBI Executive Director P Vasudevan.
The RBI’s new norms on card tokenisation took effect last year. In simple terms, card tokenisation replaces actual card details with an alternate code known as a token. According to the central bank’s guidelines for tokenisation and card storage, payment aggregators, merchants, and payment gateways were required to remove customers’ stored card data.
Debit and credit cards play a significant role in India’s merchant payments, with debit cards dominating the market, reaching approximately 92 Cr issued as of May 31, 2022. Meanwhile, at INR 86,000 Cr, ecommerce accounted for over 63% of credit card expenditure as of March 2023, as per RBI data.
Earlier this year, Visa launched a feature to allow users to make online payments without the CVV number. Later, home-grown RuPay introduced CVV-free payments for its debit, credit and prepaid cardholders who have tokenised their cards.
Further, Crypto banking platform Juno is planning to roll out a tokenised loyalty programme.
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