Tokenization: Short term pain, long term gain

Deepak Sarup, Head, Credit Cards & Retail Lending at HSBC India and Puneet Kapoor, President, Products, Alternate Channels and Customer Experience Delivery at Kotak Mahindra Bank, delve into preparedness for tokenization and its impact:

Deepak Sarup shares that HSBC India has worked with card networks and payment aggregators to be ready with compliance

Mehul Dani: What is the significance you attach to tokenization?

Deepak Sarup: Tokenization significantly enhances security and convenience of online transactions and is a positive step to instil higher confidence in the cards’ ecosystem to fuel e-commerce growth. HSBC India therefore welcomes and supports RBI’s move to mandate this for card-on-file usage.

Puneet Kapoor: Since merchants, payment aggregators and acquirers will not store card numbers under Card on file Tokenisation (CoFT), transactions will be more secure and any possibility of card data getting compromized due to merchant systems getting hacked will be eliminated. This will give a sense of security to customers while using their debit/credit cards for one-time and recurring payments.

What are the preparedness requirements at your bank level and with the other stakeholders?

Deepak Sarup: As a bank that issues credit & debit cards, we have worked with card networks and payment aggregators to be ready with compliance to the circular. Once all other participants in the ecosystem (especially e-commerce merchants) are ready, we should see this requirement play out as envisaged by the regulator. We now have time till 30th June 2022 to do so for industry-wide implementation.