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Tokenization is an imperative step for customers to add an extra layer of security to their sensitive data
In the last few months, the payments industry has been abuzz with the word tokenization. Touted to be the future of card-based payments, tokenization’s sudden traction can be linked to the Reserve Bank of India’s mandate for the adoption of card-on-file (CoF) tokenization as an alternative to card storage, the deadline for which is June 30, 2022. In a world where online frauds and cyberattacks constantly create hurdles in the adoption of digital payments, tokenization is set to add an extra layer of security to users’ sensitive data, thus preventing online and digital data breaches. However, due to the novelty of the process, many card users are unaware of how card tokenization will pan out and how merchants and payment partners will migrate all card payment flows to Tokenization. We simplify the process and break down how it is set to disrupt the digital payments industry.
The need for tokenization
Digital is currently one of the most convenient and favoured platforms for availing services and making purchases. Because of our increased frequency of making online transactions, most of us have been saving our payment information on merchant sites, which means that our payment partners have access to sensitive financial information that should otherwise be highly personal. In order to secure this data and protect not just customers but also merchants and banks, RBI is now prohibiting merchants from storing debit and credit card details on their servers post June 30, 2022. As a safer and more convenient alternative to card storage, RBI has mandated the adoption of tokenization through which one’s sensitive card information can be replaced with a non-sensitive uniquely generated code called ‘Token’.
As a textbook definition, tokenization implies the substitution of existing card details with a unique code known as a token. The implementation of the tokenisation request is then carried out through the Additional Factor of Authentication (AFA) by the cardholder. This algorithmically generated token protects sensitive information and prevents card frauds as it allows you to make payments without exposing your bank details. Currently, card tokenization is not mandatory and customers who don’t tokenize their cards have to enter their card details manually every time they have to make a transaction from July 1, 2022.
Tokenization on your Mastercard
RBI’s move toward tokenization has put the focus on the need to build a strong and robust ecosystem where merchants and partners can conveniently migrate all card payment flows to Tokenization. Along with a host of recognized card networks and issuing banks, Mastercard is also facilitating tokenization with a few simple steps. The brand, which has been workhorsing to bring to its customers the best security features in an increasingly digital-first world, has developed the Mastercard Digital Enablement Service (MDES). This service allows payment credentials to be securely tokenized and stored on mobile devices. So, if you are making a purchase with your Tokenized Mastercard debit or credit card, you will enjoy a similar experience as a regular card-based transaction with enhanced safety and convenience. Even if the cardholder’s mobile device is misplaced, details of the card still remain secure as they are stored as digital tokens. The token can be updated by the card issuer, allowing lost, expired, or replaced cards to be automatically updated with the merchant. This simplifies the consumer experience and improves success rates by reducing the number of failed transactions on account of expired card details.
Benefits of tokenization on your Mastercard
Largely designed to counter online frauds and curb digital payment breaches, tokenization comes with a slew of benefits. Some of them are:
- Enhanced safety and security: Tokens generated on your Mastercard will be unique to a single card at a specific merchant and this will take up the overall security of making card-based transactions. It eliminates the risk of storing card details online and ensures the uncompromised convenience of storing your token details on the merchant site. Once your card is tokenized, you can only view the last four digits of your card, and if your card is replaced, renewed, reissued, or upgraded, you have to recreate a token for transactions on the merchant sites.
- Quicker checkouts: Your tokenized Mastercard will also allow you the convenience of quick checkouts as you won’t need to punch in your card number for each purchase. Save your card once and you’ll have the ease of transaction at all times.
- No more ‘False Declines’: Many times your legitimate online payments using your valid cards are declined on the grounds of the transaction looking like a fraud. With tokenization, this becomes a thing of the past as the usage of tokens for payments confirms security of the highest order.
- Easy card management: With tokenization, you can also keep track of all your cards and the merchants they have been tokenized with.
- No need for a physical card: With tokenization, you can store a virtual version of your card on your smartphone for the days you forget to carry your wallet.
- Added benefits: Tokenization on your Mastercard also comes with cashback benefits when you secure it on platforms like Amazon, PayTM, Swiggy, Flipkart and PhonePe among others.
Tokenize your Mastercard
Head to the merchant site where you wish to tokenize your Mastercard and follow these three simple steps:
Want to know more about tokenization? Watch this video by Mastercard and choose the safer, tokenized path to digital transactions.
https://www.youtube.com/embed/HwTci0-sYEUDesigned on the principle of replacing sensitive data on your credit and debit cards with unique identifiers, tokenization is a huge leap towards a safe and secure digital future. Tokenize your Mastercard and enjoy the limitless convenience that it is set to herald.