In a recent statement, the National Payments Corporation of India (NPCI) announced that RuPay, the payment system in India, has introduced a new payment experience for its debit, credit, and prepaid cardholders. This experience eliminates the need for Card Verification Value (CVV) during transactions for users who have tokenized their cards on the merchant application or webpage.
Tokenization is a secure technology that protects card transactions by replacing actual card details with unique tokens, ensuring that clear or real card information is not shared with the merchants. With this new feature, cardholders who have tokenized their cards on e-commerce platforms supporting this functionality will no longer need to retrieve their physical cards or remember specific card details. Instead, they will simply need to enter the One-Time Password (OTP) or have it automatically populated by their device during domestic e-commerce transactions, facilitating a seamless payment process.
The implementation of tokenization aligns with the guidelines set by the Reserve Bank of India (RBI), which made it mandatory to replace credit and debit card data used in online, point-of-sale, and in-app transactions with unique tokens. This additional layer of security through tokenization is expected to enhance the digital payment experience for users.
According to the Reserve Bank of India (RBI), tokenization involves replacing actual card details with a unique code known as a “token.” This process significantly enhances the security of card transactions as the merchant does not receive the customer’s actual card information during transaction processing.
When a cardholder chooses to save their card details for a domestic e-commerce transaction, they verify the transaction by providing their card details (card number, CVV, card expiry date) as a one-time activity. Subsequently, they enter a One-Time Password (OTP) for two-factor authentication. The provided details are then tokenized and securely stored with the merchant.
This tokenization method protects customers’ card details from cyber fraud since the actual card information is not stored by the merchant.
In subsequent transactions on merchants’ platforms that support CVV-less payments, customers can complete the payment process by only entering the OTP, without the need to provide the CVV or other card details again. By enabling the auto-read OTP feature on customers’ devices, the payment experience becomes even smoother.
RuPay, the indigenous card network in India serving millions of individuals, is committed to streamlining payments while prioritizing security. In line with the RBI’s guidelines, RuPay implemented Card on File Tokenization in 2021 for domestic e-commerce transactions, ensuring enhanced security for all RuPay cardholders.
Denny Thomas, the head of RuPay, expressed, “Our vision has always been to facilitate effortless payments for all our RuPay cardholders without compromising on security. After collaborating extensively with the payments industry for the implementation of Card on File Tokenization to ensure the utmost security of sensitive card information, we are now focused on making the payment experience with tokenized cards seamless.”
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