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India Launches Tokenisation System to Boost Digital Payments Security

The National Payments Corporation of India (NPCI) has announced the launch of the NPCI Tokenisation System (NTS) that will support the tokenisation of RuPay cards as an alternative to storing card details with merchants. The NTS aims to enhance the safety of customers and provide a seamless shopping experience. NPCI is an umbrella organisation for operating retail payments and settlement systems owned under the country’s central bank, the Reserve Bank of India (RBI). RuPay is NPCI’s multinational financial services and payment service system.

Card tokenisation replaces the details of a card, such as its number and CVV, which is used to make a transaction with an encrypted algorithmically generated token. The token is generated either by the card issuer or payments network, a report by the Mint explained. The process is expected to secure the sensitive financial data of customers and curb cyber fraud.

According to another media report, NPCI’s Token Reference On File (TROF) service will help millions of RuPay cardholders maintain the security of their financial data. The details of cardholders will be completely safe and secure at the RuPay Network Secure vault, officials said. Based on the set of guidelines that have been mandated by the RBI, sensitive customer information is to be stored in the form of an encrypted ‘token’ to help secure transactions. These tokens then allow payments to be processed without disclosing the customer details or allowing the payment intermediaries to store customer data that could breach security and privacy.

With NTS, acquiring banks, aggregators, and merchants, among others, can get certified with NPCI and can play the role of the token requestor to help save the token reference number (TROF) against all card numbers saved. Businesses can maintain their RuPay consumer base utilising the TROF for future transactions initiated by their respective RuPay consumers.

The NPCI Chief of Products stated that RBI’s guidelines on card tokenisation are to enhance the safety of the digital payment ecosystem in the country. This unique card-on-file tokenisation solution will not only safeguard customers’ confidential data but will also further strengthen the overall digital payments environment, he added. NPCI claims this system will ensure no customer-sensitive information will get released. In addition to enhancing security, tokenisation will also help reduce friction in the payment process by providing a faster check-out experience to the customers.

NPCI was incorporated in 2008 and has created a robust payment and settlement infrastructure in the country. It has changed the way payments are made in India through a bouquet of retail payment products such as RuPay card, Immediate Payment Service (IMPS), Unified Payments Interface (UPI), Bharat Interface for Money (BHIM), BHIM Aadhaar, National Electronic Toll Collection (NETC Fastag), and Bharat BillPay. NPCI also launched UPI 2.0 to offer more secure and comprehensive services to consumers and merchants. NPCI brings innovations in the retail payment systems through technology and is working to transform India into a digital economy. It facilitates secure payments solutions with nationwide accessibility at minimal costs to attain India’s target to be a fully digital society.

NPCI is looking at US$1 trillion worth of transactions through UPI on an annual basis, as India has witnessed significant progress in the digital payments ecosystem. Last year, total digital payment transactions reached about 55 billion in terms of number, with all kinds of payments put together.

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