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By requiring card tokenization, the onus is now on payment processors and banks to maintain security. But not in merchants. Tokenized card transactions are considered more secure as the actual card details are not shared with merchants during transaction processing.
How does tokenization work?
While checking out a shopping cart of an online shopping portal, customers are required to enter their card details for payments. Here, a customer can opt for tokenization for the first time. Merchants then forward the details to the respective banks or card networks (Visa, RuPay, Mastercard, etc.). Card networks generate a token and send it back to the merchant, who saves it for the customer.
Customers can use the saved token for next purchase without having to remember it. The end customer experience remains unchanged. Also they can see the card details and the last four digits of their card number. To complete the transaction, customers need to provide CVV.
What is the new change?
By introducing CVV-free online transactions across the digital payment ecosystem, Visa has now eliminated the need to repeatedly enter CVV. However, it needs to be entered first time when tokenization is selected. The move aims to speed up domestic Card-Not-Present (CNP) tokenized transactions while ensuring secure transactions for consumers.
For faster usage of tokens, merchants using tokenization in transactions on Visa cards do not need to accept CVV every time for online transactions. This is because when the card is first tokenized, the customer will have provided the CVV. Ramakrishnan Gopalan, India – South Asia Head, Visa, said the move aims to provide customers with a positive and smooth online payment experience.
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Since the implementation of RBI guidelines in October 2022, tokenization has been rapidly adopted across online transactions. And most of the domestic CNP transactions in India are comprised of token transactions. Claiming to be the first network to offer card-on-file tokenization services in India, Visa has issued more than 250 million tokens in India as of March 2023.
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