Through this solution, users can tokenise their cards on the PhonePe app and use them across various services. The use cases include bill payments, recharges, travel bookings, insurance purchases, and payments on Pincode and online merchants using PhonePe’s payment gateway.
Users will no longer need to save card details on merchant platform or enter a CVV for every transaction. This will increase convenience and improve security.
For merchants, tokenised cards allow faster transactions and higher conversion rates. As more consumers adopt this method, businesses are expected to see improved customer retention and have an optimised checkout experience. PhonePe merchants will have access to this service.
PhonePe notes that the launch improves digital payment security by reducing fraud risks from stolen cards or leaked information. Initially, users will be able to tokenise Visa credit and debit cards.
The company aims to expand the service by integrating with more card networks and extending it to all PhonePe merchants.
Card data, if not stored properly, is vulnerable to data breaches, which increased over the past decade. These breaches lead to card fraud and diminish public trust in card payments. In response to this issue, the RBI has issued guidelines on card tokenisation to enhance security and restore public confidence in digital transactions.
Tokenisation ensures that intercepted card tokens are useless to hackers, reducing security risks for merchants and standardising security protocols. By mandating tokenisation, the RBI protects businesses from financial losses due to digital fraud and safeguards customers’ sensitive information.
30% of conversions on cards happen through saved cards, and 32% of failed transactions are never reattempted. By saving card details, businesses ensure a convenient checkout experience for their customers and eliminate the risk of failed transactions.
Card tokenisation enables users to trust this system more. The process for the cardholders doesn’t change, except for an AFA or consent that will be collected for tokenisation.
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