One of the many top world service providers has raised concerns about the feasibility of creating recurring funds with obligatory tokens as of October 1, including Netflix, Microsoft, Spotify and Disney Hotstar. It is necessary for the central financial institution to intervene through an industry body to ensure glitch-free transactions under a regime which prohibits retailers from storing subscriber card information. The Merchant Payments Alliance of India (MPAI), an association that represents retailers, has requested the Reserve Bank of India (RBI) to plug points round recurring funds by means of tokens earlier than giving impact to the no-card storage rule, three individuals accustomed to the event advised ET.
MPAI mentioned in a letter to the RBI, “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.”
“We also request that the RBI takes appropriate actions as deemed necessary to ensure that issues with token flows for recurring payments are duly addressed, before requiring the ecosystem to action the no-card-storage rule.”
ET has seen a duplicate of the letter addressed to the central financial institution. Tokenisation is a course of by which card particulars are changed by a novel code or token, permitting on-line purchases to undergo with out exposing delicate card particulars. Central financial institution guidelines require all retailers to delete buyer debit and bank card particulars earlier than October 1 and exchange card funds with distinctive tokens. Merchants are assembly on Monday, and can doubtless request a deferral of this deadline.
Several merchants have expressed concern that implementing tokenization without adequate preparation will result in significant disruptions of recurring funds, similar to what occurred in October of last year when the mandate was first introduced. “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,” mentioned one of many retailers concerned within the discussions. “We fear that the recurring piece will once again face massive disruption.”
THIRD EXTENSION
On October 1, 2022 the RBI mentioned in July it might not lengthen the timeline for storing card information and directed all stakeholders, besides for card issuers and card networks, to purge the shopper information.
This is the third such extension previously 18 months. The central financial institution has allowed retailers and fee aggregators to store card-on-file (CoF) only for customer checkout transactions within four days of the transaction date.
In addition, the letter stated that penal action, including the imposition of business restrictions, would be considered in the event of a non-compliance. Although banks and other industry players maintain that they are completely prepared, retailers have informed the central financial institution that processing recurring funds remains a difficult exercise due to the multiple steps involved.
TRICKY PROCESS
In order to tokenize cards in such funds, mandates must be created, and these mandates must then be migrated onto tokens. It may also be difficult to make periodic autodebits on an associated account using a combination of mandate ID and token, according to specialists.
The letter to the RBI states, “We note that our members who are completely dependent on payment aggregators have had no testing experience on all three of the above-mentioned elements to date.”
“Members that have been able to test still have only limited visibility on the efficacy of recurring payment flows due to lean upstream readiness. At the merchant’s end, access to bank identification numbers (BINs) from card networks is necessary to map mandate IDs and process recurring payments. Progress on this front is also limited.”
