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Merchants Urge RBI for Feasibility of Making Recurring Payments Through Mandatory Tokens

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Netflix, Microsoft, Spotify and Disney Hotstar are among the top global service providers that have raised questions on the feasibility of making recurring payments through mandatory tokens from October 1, seeking central bank intervention through an industry body to ensure glitch-free transactions in a regime that will bar merchants from storing subscriber card details.

The MPAI, an association that represents merchants, has requested the Reserve Bank of India (RBI) to plug issues around recurring payments through tokens before giving effect to the no-card storage rule, as per reports.

MPAI says, “We humbly request that the RBI mandates card networks, payment aggregators and payment gateways to share a status report to demonstrate their readiness to fulfill tokenized 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.”

Tokenization is a process by which card details are replaced by a unique code or token, allowing online purchases to go through without exposing sensitive card details.

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

Central bank rules require all merchants to delete customer debit and credit card details before October 1 and replace card payments with unique tokens. Merchants are meeting on Monday, and will likely request a deferral of this deadline.

According to the merchants, “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.”

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