New card info storage rules to hit international online payments – Times of India
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MUMBAI: With the June 30 deadline nearing for online businesses to tokenise cards to enable recurring use, Indian consumers are likely to face problems with e-subscriptions for international magazines and other payments that require card information storage. For tokenisation, companies have to tie up with payment service providers and put systems in place so that they can debit payments to customers’ cards without having to store the card information on their servers.
In May, Apple informed customers that it will no longer accept Indian credit and debit cards for app purchases or subscriptions, citing new norms from the RBI. Customers can use UPI and also store money in their Apple wallet that can be used for payments. The problem is not just with Apple but most subscriptions-based online services. Some of these firms require card numbers to be stored even if the customer wants to make a one-time payment as the process is automated.
Earlier, some players – including streaming services and Google – came up with the required workarounds to comply with card storage guidelines. This is because they have a sizeable Indian market. In addition to magazine and other content subscriptions, the payments that are likely to be hit are online software services, and pay-as-you-go charges for some advertisements.
According to a source, the RBI took the tough stance after complaints from that cancelling international subscriptions was a major challenge. In some cases, customers had to cancel their cards to stop debits. Also, the number of online transactions outstripped those on card-swipe machines during Covid. While the RBI can impose multi-factor authentication for domestic transactions, international merchants are outside its jurisdiction.
As far as domestic payments are concerned, most Indian firms have achieved compliance. In December 2021, the RBI had extended the year-end deadline for storing ‘card on file’ data to June 30, 2022. The RBI has suggested businesses can use other options, such as recurring e-mandates and EMIs in addition to tokenisation. Payment companies such as Razorpay, PayU, PhonePe, Worldline, Pine Labs and Cashfree Payments provide the bridge for these services between banks and e-commerce firms.
According to Razorpay SVP & head (payments product) Khilan Haria, as the deadline is fast approaching, the firm is witnessing a considerable uptick in the number of merchants enabling its tokenisation solution TokenHQ.
In May, Apple informed customers that it will no longer accept Indian credit and debit cards for app purchases or subscriptions, citing new norms from the RBI. Customers can use UPI and also store money in their Apple wallet that can be used for payments. The problem is not just with Apple but most subscriptions-based online services. Some of these firms require card numbers to be stored even if the customer wants to make a one-time payment as the process is automated.
Earlier, some players – including streaming services and Google – came up with the required workarounds to comply with card storage guidelines. This is because they have a sizeable Indian market. In addition to magazine and other content subscriptions, the payments that are likely to be hit are online software services, and pay-as-you-go charges for some advertisements.
According to a source, the RBI took the tough stance after complaints from that cancelling international subscriptions was a major challenge. In some cases, customers had to cancel their cards to stop debits. Also, the number of online transactions outstripped those on card-swipe machines during Covid. While the RBI can impose multi-factor authentication for domestic transactions, international merchants are outside its jurisdiction.
As far as domestic payments are concerned, most Indian firms have achieved compliance. In December 2021, the RBI had extended the year-end deadline for storing ‘card on file’ data to June 30, 2022. The RBI has suggested businesses can use other options, such as recurring e-mandates and EMIs in addition to tokenisation. Payment companies such as Razorpay, PayU, PhonePe, Worldline, Pine Labs and Cashfree Payments provide the bridge for these services between banks and e-commerce firms.
According to Razorpay SVP & head (payments product) Khilan Haria, as the deadline is fast approaching, the firm is witnessing a considerable uptick in the number of merchants enabling its tokenisation solution TokenHQ.
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