What is Tokenization and why should I tokenize my card ?

Modified on Wed, 12 Oct 2022 at 10:41 AM

What is tokenization? 

Every time we make an online payment via a debit or a credit card, the system asks us to enter our card details, expiry date, CVV, and so on. Then, an OTP is generated, and upon adding that, the payment is completed. 

Now, instead of filling out these card details, which are stored in the merchant’s system, all you would need is an “encrypted token”, unique for each user. In simpler terms, a token is a replacement for all of your actual card details. 

Why is this being done? 

Simply put, data protection. Every time we enter our card details, the data is stored by the entities (merchants, payment gateways, payment aggregators) involved in an online card transaction for convenience. 

Needless to say, saving this kind of crucial information increases the risk of card data being stolen or misused. 

With unique tokens, no merchant will be able to store anything during the transaction process. 

How can I generate a token?


Step 1: Visit any e-commerce or merchant website or app

Step 2: At checkout, choose your payment method, and enter your card details (debit/credit) as usual. 

Step 3: You will see an option of “Secure your card as per RBI guidelines” or “Tokenize your card as per RBI guidelines”. Select this option and continue with the payment. 

Step 4: Enter OTP sent to your mobile phone or email by your bank and complete the transaction.

Step 5: Your token will be generated and saved instead of the actual details of your card. 

When you visit the same website or application again, the last four digits of your saved card will be displayed to help you identify your card for doing the payment.

Note- If you have set a mandate for recurring transactions with any merchant, request you to delete the card details and re-add the card to have it tokenized for smooth processing of these recurring transactions going forward.

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