Card tokenisation
Also called: Tokenisation of cards · Topic: Payment Systems and Digital Finance · NCERT: Beyond NCERT
Meaning
Card tokenisation means replacing the real card number with a unique code called a token for online payments. RBI made it effective from 1 October 2022. Merchants are no longer allowed to store customers' card numbers. They keep only the token. So if a merchant's data leaks, no real card details are exposed. It adds to other card safeguards, such as the EMV chip with PIN at shops and an extra check (usually an OTP) for online card payments.
Example
Ravi saves his card on a food-delivery app. The app does not keep his 16-digit card number. It keeps a token instead. If hackers break into the app's database, they cannot use that token as Ravi's card number.
Don't confuse with
- Encryption: encryption scrambles the real card number, but the real number is still there. Tokenisation replaces the card number, so the merchant never holds it at all.
Related concepts
- Automated Teller Machine
- Personal Identification Number
- National Financial Switch
- Debit card
- Credit card
- Plastic money
- Point of Sale