Pure-play credit card issuer SBI Card has paved the way for the move to card tokenization, which is expected to come into effect from October, a measure aimed at protecting against fraud as well as data theft.
“In terms of readiness, readiness, technology, integration with all networks, we are ready with all networks like Visa, Mastercard and RuPay,” said Rama Mohan Rao Amara, CEO, SBI Cards and Payment Services ( SBI Card) told PTI on Thursday.
According to the Reserve Bank of India (RBI), tokenization refers to the replacement of the actual card details with an alternative code called a “token”, which must be unique for a combination of card, token applicant and device.
A tokenized card transaction is considered more secure because the actual card details are not shared with the merchant while the transaction is being processed.
Regarding card tokenization, Amara said, “It is a very good measure in terms of protecting consumer interests and protecting against any data leaks.” In late June, the RBI had extended the deadline for tokenization of the Card on File (CoF) by three months until September 30, following various representations received from stakeholders.
The first deadline was June 30.
Stakeholders had issues related to the implementation of the framework with respect to customer payment transactions, among others. They also said that a number of transactions processed using tokens have yet to gain traction across all merchant categories.
“I think the universe of large traders that is a big part of spending, they’ve already been tokenized. It’s the small traders that are doing it now (are doing it),” Amara said.
The credit card company, promoted by the nation’s largest lender, SBI, also announced the launch of a new credit card aimed specifically at cash back rewards.
“The kind of trend we’ve seen with consumers is that instead of patiently waiting for rewards points to accumulate over a period of time, they want them instantly.
“Now the demand is for instant cashback. So, seeing this trend, we are launching this credit card. It is a first of its kind in the industry. In terms of merchant availability, it is very comprehensive compared to others in the market,” the official said.
The card is free until March 2023. However, from the next fiscal year, an annual fee of Rs 999 will be charged, which can also constitute a full waiver if a customer exceeds the spending threshold of Rs 2 lakh per annum.
Amara said the company will acquire customers for this new card entirely digitally, and customers can go to the company’s website to apply.
On the demand front and consumer spending behavior, Amara said industry volumes have been quite robust over the past five months. In July, it crossed the Rs 1 trillion mark, which is a new standard for the industry.
It is largely explained by the strong recovery in discretionary spending, particularly in poorly controlled segments. Domestic travel and hospitality, they came back strong and reached the pre-COVID level.
“There is a robust trend in retail spend and other components such as trade spend where businesses can use it to make B2B payments to a vendor etc., this volume has increased over time due some aggressive actors,” Amara said.
(Except for the title, this story has not been edited by NDTV staff and is published from a syndicated feed.)