Card Tokenisation: MPAI Asks RBI To Address Concerns On Token Flow For Recurring Payments

As the deadline for card tokenisation nears, the Merchant Payments Alliance of India (MPAI) has reportedly raised concerns with the Reserve Bank of India (RBI) around unresolved issues with token for recurring payments and urged it to ensure that they are duly addressed.

“We humbly request that the RBI mandates card networks, payment aggregators and payment gateways to share a status report to demonstrate their readiness to fulfil tokenised transactions across all use cases,” the Economic Times quoted the MPAI as saying in a letter to the RBI.

The MPAI represents a group of merchants who accept digital payments. Netflix, Disney+Hotstar, and Spotify are among some of its prominent members.

The new rules for storage of card details will come into effect from October 1. Earlier in June, the RBI gave the payments ecosystem time till September 30 for purging all card-on-file (CoF) data, the third extension in the last one-and-a-half years.

The RBI first released the guidelines back in 2019.

The merchants will hold a meeting on Monday and are likely to request a deferral of the deadline. Merchants are of the view that the implementation of tokenisation without adequate preparedness can result in major disruption in recurring payments.

“As merchants, we don’t know whether the upstream partner is ready. While we have been given verbal assurances by our partners, we haven’t received any sample transactions nor have we been able to test this on our own platform,” one of the merchants was quoted as saying in the report.

The merchant also shared concern that the recurring transactions may face massive disruption again.

Tokenisation is the process where actual card details are replaced with an alternate code, called a token. Under the RBI’s guidelines for tokenisation and card storage, payment aggregators, merchants and payment gateways will have to purge the customers’ card data stored with them.

It must be noted that the implementation of the central bank’s e-mandate framework for recurring transactions in October last year led to disruptions and fall in revenue of subscription-based companies. Under the framework, recurring payments of over INR 5,000 through cards were to be processed with a one-time password.

In June this year, the RBI increased the e-mandate limit for recurring payments to INR 15,000.