Business-standard, December 20, 2021
At least 82 per cent consumers consider it would be somewhat or extremely inconvenient for them to re-enter all their details for every card-based online payment, said a nationwide survey on popular opinion conducted in view of the central bank’s new security guidelines.
The Consumer Unity and Trust Society (CUTS) survey found consumers think they are likely to face several risks, if they re-enter all their details for card-based online payments. This included risk of transaction failure due to entering incorrect card details for every transaction (44 per cent), and risk of exposing their confidential card-details to third persons while making payments in public (42 per cent).
The online survey–conducted among 1,100 respondents–found fears of risks is likely to make 28 per cent of consumers shift to paying cash on delivery.
The Reserve Bank of India’s (RBI) circular on “Card Transactions: Permitting Card-on-File Tokenisation (CoFT) Services” (tokenisation), dated September 7, 2021, read with the ‘Guidelines on Regulation of Payment Aggregators (PA)and Payment Gateways (PG)’, bars merchants from storing consumers’ card details from January 1, 2022. It instead permits CoFT, and directs merchants to purge the card details currently stored with them by this date.
The survey found that consumers are more likely to store their card details with merchants they transact with frequently. It showed that consumers are aware of possible risks involved in storing their card details with online service providers.
As many as 57 per cent consumers said they trusted different stakeholders of card-based online payments, and they stored their card details online despite the risks. Other notable reasons for storing card details online included convenience (58 per cent), and benefits in the form of cashbacks/rewards (57 per cent).
This highlights strong consumer preference towards storing card-details online, along with the extent of adverse impact of lack of timely operationalisation of tokenisation.
At a webinar held by CUTS to discuss the CoFT deadline on Friday, Aruna Sharma, Former Member, RBI Digitisation Committee voiced her support for RBI’s move to permit tokenisation. However, she also cautioned against the stringent deadline of 31 December 2021, making it less than four months for operationalising the new paradigm. She further said that consumers may be forced to re-enter all their card details for making each card- based online payment, in case CoFT was not implemented by the deadline for merchants on purging stored card details.
Other experts in the webinar also said that if CoFT is not implemented by this deadline, it will force consumers to re-enter all their card details (card number, expiry date, name on card) for making each card-based online payment.
“In light of these findings, it is recommended that RBI avoids inflicting a double blow to digital payments. Consumers have already experienced adverse consequences of lack of timely implementation of RBI’s circular on ‘Framework for processing of e-mandates for recurring online transactions’. A similar fate awaits them, in case tokenisation is not implemented by the deadline,” CUTS said in a statement.
However, given that the RBI has only set a functional deadline for merchants to purge the stored card details, while not fixing a technical deadline for card issuers and card networks for enabling tokenisation, timely implementation appears to be unlikely.
There is merit in adopting a tiered approach in fixing deadlines, one for operationalising tokenisation, and a subsequent one for purging card details, said CUTS.
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