Please enable JavaScript.
Coggle requires JavaScript to display documents.
Tokenization of Debit and Credit Cards - Coggle Diagram
Tokenization of Debit and Credit Cards
What is Tokenisation?
Replacement of card details with an alternative code called a ‘token’
Unique for a combination of card, token requestor and the device
E-commerce companies and airlines and supermarket chains often store card details.
Benefits of Tokenization
It provides contact-less card transactions
Only card networks and card-issuing banks can store any card data
It reduces the chances of fraud arising from sharing card details
Card data are mostly held by foreign service providers such as VISA, Mastercard
How are the transactions currently processed?
PA next sends the details to either the issuing bank or the card network
Transaction data is sent to the payment aggregator (PA)
Issuing bank sends an OTP and the transaction flows back
Four players involved:
Merchant
Payment aggregator
Issuing bank
Card network
Which companies dominate card transactions?
Mastercard: 37-40%
Rupay: 13%
VISA: 45%
Is the industry ready to implement this?
90% of banks are ready with provisioning of token on Visa.
Only 25-30% banks are ready on Mastercard.
Not fully, that is why the RBI had to extend the deadline.
Impact on businesses
Cashbacks/discount offers by banks will be impacted
Users will have to enter the card details every time a transaction is made
Card EMIs account for 25% of online e-commerce sales. That option will no longer be available.
Increase in cost of transaction
Way forward
Biggger disruption to the way digital payments
The industry needs to test the performance and success rate of the tokenization solution.
A move to begin Data Localization