Relief to payments industry as RBI grants 6 month extension on CoF storage

We, the Merchant Payments Alliance of India, are delighted to learn about the extension provided by the Reserve Bank of India (RBI) by way of the latest circular (CO.DPSS.POLC.No.S-1211/02-14-003/2021-22) on the storage of Card-on-File.

The RBI’s Directive dated September 07, 2021, on Card on File (CoF) tokenization, read with Guidelines on Regulation of Payment Aggregators and Payment Gateways prohibited merchants from storing customer card details on their servers with effect from January 01, 2022, and mandate the adoption of CoF tokenization as an alternative to card storage.

However, only 80% of banks are ready with provisioning of tokens on one of the major card networks and only 25-30% of banks on a second network. The other networks are yet to make major strides on provisioning front. Moreover, the readiness of processing of tokens is at 0%. Provisioning of tokens without ability to process is like having a secure wallet but without ability to take or put money in it.

We had consequently represented to the RBI that if implemented in the present state of readiness, this mandate could cause major disruptions for Indian consumers and loss of revenues for merchants, large and small. The RBI listened, and we are thankful.

We welcome the significant progress that the Government of India and the Reserve Bank of India (RBI) has made in supporting the growth of a safe, convenient, and secure digital payments ecosystem. Since ecosystem readiness is a sequential process, we stand with the regulator and the Government of India to do our part and share information on this front. We also look forward to undertake more consumer awareness initiatives in the days ahead.

Anywhere between 300-350 million Indians are expected to buy goods and services via online stores by 2025. Therefore, merchants play a key role in the digital payments value chain and the regulator’s latest decision is testimony to this fact. We appreciate this exemplary instance of responsive and agile regulation and we hope to continue to provide constructive inputs on behalf of the merchant community, in 2022.

MPAI looks forward to working with the ecosystem and accelerate deepening of Digital Payments in a robust, convenient, safe and  seamless manner.