The Indian banks have been pressing ahead with the plans to tokenise cards and explore ways that to could route digital payment transactions through these tokens. This is done in order to make sure that card-based transactions are not affected from July 1.

Tokenisation is a method by which card details are replaced by a unique code or token, permitting online purchases to take place without exposing sensitive card details.

As per the latest order by Reserve Bank of India, all merchants should delete client’s debit and credit card information on or before 30 June. Within the same time period the merchants should replace card payments with unique tokens for all online, point-of-sale and in-app transactions.

Well, in order to make online payments contactless payments RBI has come up with the idea of tokenization. The pandemic has led the concern of contactless payments out of fear due to which the online transactions have been growing day by day due to its benefits. The share of contactless transactions in India has seen a growth by more than six times, as per experts.

The payment aggregates have been stating that the move by banks and aggregators follows an illustration created to the Reserve Bank of India (RBI) beneath the aegis NSE -0.89% of the Indian Banks’ Association to extend the deadline by another six months, if possible.

Recently, RBI has said that they have not yet decided about the deadline extension, as more than 160 million tokens had already been issued by many stakeholders.

T Rabi Sankar, deputy governor of RBI had mentioned that over the last few months their teams are perpetually discussing with all stakeholders to make sure that the method of tokenization is enforced smoothly. “The system is by and large prepared. All the card networks are offereing tokenisation. Around 16 crore have already been made and this number would pick up as we go beyond the deadline.”

Sankar was asked about the deadline extension and he said the RBI was looking at some collateral issues.

“I really don’t think there is any need to speculate on whether or not the timeline will be extended” he had said. “Well there are some collateral issues that have come to our notice, which we would adjust as we go.”

Certain banks have been found saying that their systems are ready to meet the deadline, so they do not require any kind of extension from RBI.

According to payment aggregator Razorpay, it has tokenised around 15 million client cards across its merchant platforms, with a majority of the tokenisation activity undertaken within the past four weeks.

Khilan Haria, the senior vice president of Razorpay has pointed out that the top 3 card network suppliers or providers – Visa, Mastercard and RuPay– going live on tokenisation and there's readiness in the ecosystem.

Haria even said that across all the highest networks, which are supposed to be live on tokenisation, tend to make us see about 5%-6% transaction having an inferior success rate and the other 2%-3% total transaction were failures through tokenized cards. For some long-tail issuers, they were earlier seeing a (pre-tokenized transaction) success rate of 80% that has currently come down all the way to almost 3%.

Since April, Fintech firm PhonePe has conjointly initiated token-based transaction processing, said by a spokesperson who even added that the company had processed roughly 3 million transactions until date with higher success rate than card number-based transactions.

Payment executives have mentioned that varied stakeholders were currently seeking an extension from RBI, fearing disruption in many use-cases.

A payment industry executive has stated on the condition of anonymity that for giant ecommerce platforms, some use cases are still not prepared on tokenisation. For an example, for bank-related offer flows, wherever the card BIN was needed, it'll take a while to integrate fully. Earlier, merchants could store the card number to provide information to the customers about the availability of an offer, which won’t be possible in terms of tokenisation.