As the virtual market is holding on to the speed of development, digital theft is also catching the pace of growth. While giving a boost to the economy contactless payments have given online frauds a chance to flourish by stealing the personal details of a user. A study in July 2022 noted that, where 91% of Indians prefer the online method of transaction, 29% of them experienced larceny through stolen card or payment details.
According to the updated RBI bulletin in February 2022, online transaction volumes on private payment gateway have shown a growth of 45.6% in tier 2 cities while the growth of 54.3% is seen in tier 3 cities during 2021.
New cyber-security norms
RBI is coming up with different ways to secure digital users from cyber frauds and thefts and hence regulating circulars to secure cards and online payment platforms. The new norms that came into the act on July 1, 2022, restricted the co-branding partners in the issuance of credit or debit cards on their own. They are either limited to distributing the cards or providing access to goods and services only.[VR1]
RBI needs NBCFs to follow the guidelines before issuing a co-branding card. On the other hand, direct written consent is required for all cards issued by a card issuer; an alternative digital mode can be used instead of written consent.
The new circular narrows the card issuers' limits to any up-gradation of a card or increasing credit limits without direct consent from the customers. Also, any request to close the credit card service from a customer after completing all the dues should be fulfilled in seven days; any delay will lead to a ₹500 penalty per day.
New Digital security method
The government of India is encouraging the growth of digitalization since its arrival in the country and, has introduced an anti-theft method of Tokenization for its citizens to feel safe while approaching a digital means of payment. Tokenization simply refers to a token number given to a consumer in place of sensitive details such as bank account or card details.
The number used as a substitution for the sensitive data would disconnect any kind of personal information from the transactions and hence secure the user’s account from the illegal breach. A payment gateway created by e-commerce services, stores the consumer’s data and pass on a randomly selected number as an alternative to the personal data, the number can be then used as a payment medium.
Benefits of tokenization
Enhance safety and security
In order to create an online transaction, customers tend to share their personal data with online merchandise services, to protect users, merchandise, and banks from personal data breaches tokenization came as an aid for secure transactions. This built a user’s trust in online transactions or using cards for payments, thus increasing the use of digitalization in economic growth.
More convenient
RBI mandated all online merchants to adopt tokenization and terminate storing customers’ debit and credit card details on their servers for safe and convenient use of business but the circular is not compulsory for the tokenization of cards. The regular card has to be punched and the details entered manually, whereas a tokenized card is more convenient as the data is saved for life and it doesn't have to be punched every time you use it.
Safe for businesses
Businesses that follow online transaction methods often fall into the hands of frauds and end up losing large amounts stored in their company account; a token number restricts the fraudster to hack the sensitive data.
Merchandise and Banks security
Banks and merchandise sometimes fall prey to the data breach fraud of their customers; this impacts the status of the merchandise which leads to a loss in customers and hence the loss of revenues. With the suffering in revenue loss sometimes business has to suffer a lawsuit from the victims that use their service.
Easy management and mobility
It is easy to track every tokenized card and the merchandise to which the card is linked. With tokenization easily store the virtual version of cards and carry it everywhere with a smartphone.
Internal Security
Since a token is not readable to anyone other than the payment processor the card or account details are secured to the level of the internal staff of the digital payment provider.
Feel safe with BankIT cards and services
BankIT provides the Aadhaar enabled payment system (AePS) for a more secure payment method.
BankIT helps its customers to feel secure by providing an instant blocking or deactivation service in case of card loss.
A 24/7 service is in customers’ hands in case of any query regarding cards or services.
With BankIT it is possible to set the merchandise limit so that the card cannot be used for anything else and hence impossible to be misused.
Following the RBI norms and regulations, BankIT is able to secure the personal data of its customers from breaches.
Can a co-branded partner be a PPI licensed company as per RBI. [VR1]
