PhonePe introduces tokenisation solution ahead of RBI’s December 31 deadline

PhonePe App (PC- Twitter/@PhonePe_)

Digital payments and financial services company PhonePe said on November 2 that it has launched a tokenisation solution for online debit and credit card transactions called PhonePe SafeCard.

PhonePe has joined card companies and payment companies like Visa, Rupay, Razorpay, and PayU in introducing tokenisation solutions ahead of the December 31 deadline for the Reserve Bank of India’s (RBI) guidelines for Payment Aggregators (PG) and Payment Gateways (PG).

Tokenisation refers to the replacement of actual card details with an alternate code called the “token”, which shall be unique for every debit or credit card, token requestor and device. A token requestor is the entity that accepts requests from the customer for tokenisation of a card and passes it on to the card network to issue a corresponding token.

As per RBI’s guidelines that are aimed at making card payments more secure, PAs and merchants shall not store card credentials of customers in their database starting January 1, 2022. PhonePe which acts as a PA for merchants and customers has also applied for RBI’s PA license.

Ankit Gaur, Director of Online Business at PhonePe said “RBI’s new guideline mandating tokenisation will allow for the continued growth of digital payments, with the additional security that tokenisation provides. Crucially, PhonePe SafeCard ensures that the added security doesn’t impact the customer experience at all. We are also closely working with our large merchant base to take them live on this platform.”

In the lack of an alternative like CoF Tokenisation , customers who wish to use their credit or debit cards would have to enter details afresh for each transaction – including their 16-digit card number, card expiry date and card verification value (CVV).

PhonePe has around 80 million saved cards on its platform and this solution will enable both users and merchant partners to continue executing transactions even after the December 31 deadline. This solution supports all major card networks such as Mastercard, Rupay and Visa, PhonePe said.

Through SafeCard PhonePe will allow merchant partners to create, process, delete and modify tokens for online card payments with consent of their customers and use tokenisation on their own platforms via an Application Programming Interface (API) integration. PhonePe will continue to partner with PGs for the processing of payments using the created tokens.

This will save the merchant partners significant time and effort by removing the need to integrate with multiple card networks, while complying with the new RBI guidelines, PhonePe added.

Founded in 2015 by former Flipkart executives Sameer Nigam, Rahul Chari, and Burzin Engineer, the company has over 325 million registered users and is accepted at over 22 million merchant outlets. Apart from payments, the platform also offers insurance, gold purchasing, and mutual fund services.