PhonePe tokenises 14 mn cards ahead of RBI’s deadline of Sept 30
PhonePe on Thursday said it has tokenised 14 million credit and debit cards on its platform in line with the Reserve Bank of India’s (RBI) mandate for information security.
The Walmart-backed company said it has tokenised more than 80 per cent of its active users’ cards since it started the exercise in December 2021. Tokenisation replaces an actual card number with an alternative code called the ‘token’. A tokenised transaction is safer as the actual card details are not shared with a merchant during transactions, reducing the chance of information leakage.
PhonePe said it is working with three major card networks, Visa, Mastercard, and RuPay, to meet the regulator’s tokenisation deadline of September 30.
The digital payments firm started processing token-based transactions from April this year, and it processes almost all eligible transactions through tokens.
The success rate of transactions processed via tokens on PhonePe has shown an improvement of around 2 per cent in comparison with card-based transactions, over the past few weeks, the company said in a statement.
The RBI in July extended the deadline for card-on-file tokenisation till September 30 as transaction processing based on tokens were yet to gain traction. It was the third such extension and perhaps the last.
While extending the deadline, the RBI had said that the industry should use the extended time to facilitate all stakeholders to be ready for handling tokenised transactions. The regulator also asked the payment players to create public awareness about the process of creating tokens and using them to undertake transactions.
“We believe card tokenisation is a very progressive move by the RBI, and we are on track to meet the September 30th deadline,” said Deep Agrawal, Head of Payments at PhonePe.
“PhonePe Safecard solution enables our users and merchant partners to continue experiencing the convenience of saved card transactions with increased security. For customers, their card details are saved only by the issuer banks and card networks, minimizing the risk of data leakage and transaction fraud. For merchants, safer transactions translate to consumer confidence in using cards on online platforms, thereby helping merchants witness growth in overall transactions,” he said.
Many other payment platforms had developed tokenization solutions following the RBI’s mandate on storage of card details. PayU, an online payment solution provider, launched “PayU Token Hub”, which offers both network tokens and issuer tokens under a single hub. Razorpay has developed “Razorpay TokenHQ”, a multi network card–on–file tokenisation solution.
The National Payments Corporation of India (NPCI) is working with brands and aggregators to introduce a tokenisation facility.