WHAT ACTUALLY HAPPENED..??
For various transactions related to card such as debit/credit cards, Reserve Bank of India has released certain set of guidelines on tokenization. It means RBI has given approval to all the banks, to use tokenization, which means it is not compulsory but if, they want they can use tokenization method.
Let’s understand first how without tokenization, transaction takes place digitally,
Suppose a person XYZ wants to buy something from Amazon or some other website, he wants to make an online transaction, he owns a debit card. He will fill his debit card details on Amazon website, card number, expiry date, cvv number, pin etc, through the gateway of visa the person XYZ will get an OTP on his number, which is used for confirmation and security to make sure the person who owns the card is using his/her card. The moment XYZ fills his OTP, it’s authenticated that the same person is making the payment, and the payment process is done, for now this method is used.
But you need to understand when all these process is happening, Amazon’s or any other website stores your cards details. It doesn’t mean they will stole your money through hacking or something, it is just for making the whole process easier for you.
Here the problem is…
- what would happen if the service providers get hacked…??
- what will happen to your data..??
Don’t worry, the hacker can’t stole your money but your personal details, your online identity can be stolen which is quite dangerous.
Therefor to combat all these issues
RBI to the rescue…!!
To avoid such data theft, RBI has introduced tokenization
So how will it work to stop such eventual hacking that we are worried for…??
In a very simple language, whatever details you are providing, will be replaced with a code, the service provider won’t store your card details but instead they will store the code called token.
For example, if you have to a make payment on an online shopping website, you need to enter your 16 digit card number. like IIII IIII IIII IIII
The moment you will enter your card number, a token number will be created for your card number, on your phone. like, 6$28##+1
The service provider will store only your token number, not your card number. After one use your token will be detokenised, so you can use one token only once. So one benefit here is more digital transaction would increase as so many people still feel insecure to use the online process. With such safety features may be some of them would change their mind, so let us hope this system comes in use in India as soon as possible. For more updates do watch our youtube video.