Tag: card

Paytm launches card tokenisation for online transactions

Banking & Finance

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Paytm Payments Services Ltd (PPSL), a wholly-owned subsidiary of Paytm, is offering ‘card on file’ tokenisation service through the launch of Paytm Token Gateway. It has partnered with platforms such as Myntra, Oyo, Domino’s and others for this service, as also payment giants like Visa, Mastercard and RuPay.

The card-on-file tokenisation service will be available for all Paytm consumers and merchants. It is aligned with Reserve Bank of India guidelines, which says the “saved cards” feature will not be allowed on a merchant network anymore.

The tokenisation service allows a user’s card details to be stored as a unique, irreversible ‘digital token’ for secure transactions. It offers seamless digital card payments by ensuring customers don’t have to remember their card details for every transaction.

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Praveen Sharma, MD and CEO, Paytm Payments Services Ltd, said, “Tokenisation is the future of digital payments and also ensures safety, as a user’s card details are not shared with anyone. Our merchant partners can now offer seamless, secure payments to their users.”

A tokenised card transaction is considered safer as the card details are not shared with the merchant.

The details are only shared with the issuing bank and the affiliated network. It will also require explicit customer consent via additional authentication.

WhatsApp gets NPCI nod for doubling payments user base

This will allow e-commerce companies to offer customers the ease of tokenising debit and credit cards. End-customers can thus continue to shop via the saved cards feature, which allows faster checkouts.

As per RBI guidelines, all merchants and/or ecommerce stores have to comply with the new card-on-file tokenisation feature by December 31, 2021.

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Towards a level playing field in ‘Business Correspondent’ model of banks

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The Reserve Bank of India (RBI) should rationalise the interchange fees for Aadhaar Enabled Payments System (AePS) transactions and also disincentivise Business Correspondents (BCs) for unfair business activities to generate commission, according to State Bank of India’s economic research report Ecowrap.

This can ensure a level playing field in the BC model followed by public sector banks (PSBs) and other banks.

AePS is a bank-led model that allows online interoperable financial inclusion transactions at point of sale/PoS (micro ATM) through the BC of any bank using Aadhaar authentication.

BCs are retail agents engaged by banks to provide banking services at locations other than a bank branch/ATM.

How to make BCs more viable

PSBs mostly follow ‘branch-led BC model’, while other banks follow ‘branch less/ micro ATM/kiosk application on mobile/corporate BC model’ for financial inclusion.

Three key facts

The report underscored three facts — more than 77 per cent Pradhan Mantri Jan Dhan Yojana (PMJDY) accounts have been opened by PSBs; the number of BCs/customer service points (CSPs) of other banks largely outnumbered that of PSBs and, over the years, OFF-US transactions are increasing.

Data indicate that the share of AePS “OFF-US” transactions (where the card issuing bank and acquiring bank are different entities) in AePS increased from 4 per cent in September 2016 to 51 per cent in September 2021.

In AePS “ON-US” transaction, the card issuing bank and the acquiring bank are the same entity.

“Considering these facts, PSBs (that opened around 77 per cent of the PMJDY accounts) are now net payers of interchange fee. We estimate that the PSBs could be paying ₹600-700 crore per annum as interchange fee,” said Soumya Kanti Ghosh, Chief Economic Adviser, SBI.

He emphasised that since AePS works like a PoS, logically the ‘acquiring bank’ (the bank which has installed the PoS terminal at the merchant location) should pay the interchange fee to the ‘issuing bank’(the bank which has issued the card to the customer).

Alternatively, there could be rationalisation in interchange fee as there is no level playing field in infrastructure provided by all banks.

Holistic financial inclusion

With requisite savings, banks can further strengthen/upgrade their BC model and promote financial inclusion in a more holistic manner, the report said.

Currently, the account opening bank pays an interchange fee to the operator of the BC/ CSP when a customer makes a transaction at micro ATM that does not belong to the account opening bank (that is OFF-US transaction).

At present the interchange fee is 0.5 per cent of transaction amount (minimum ₹1 and maximum ₹15) for an OFF-US financial transaction and ₹5-7 for non-financial transaction.

The report noted that BCs convert AePS ON-US transactions of one set of bank customers to AePS OFF-US issuer transactions and also carry out multiple AePS ON-US and AePS OFF-US transactions on the primary bank application/software.

Women Business Correspondents: Agents of change in India’s financial inclusion

SBI’s economic research department cautioned that the ‘micro ATM/kiosk application on mobile’ model might also lead to several frauds as the mobile BCs introduce themselves as government persons and need biometric authentication to provide different types of subsidy.

PSBs, who are active in financial inclusion activities, have opened a large number of PMJDY accounts (out of 44 crore accounts, PSBs opened 34 crore accounts and non-PSBs 1.3 crore, rest RRBs) with minimal balance and thus incur recurring expenditure by way of servicing such customers, including issuance of free RuPay debit card, besides monthly remuneration for BC operations.

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ICICI Bank 2nd in card spends, ahead of SBI, BFSI News, ET BFSI

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ICICI Bank has overtaken SBI in credit card spends in August taking the number two spot after HDFC Bank. According to RBI data, ICICI Bank had a market share of 19.6% in August 2020 up from 15.8% in August 2020. SBI Card’s market share in spends, slipped to 18.7% in August 2021 from 20% in the previous year.

In absolute terms, total spending through credit cards in August 2021 was Rs 77,733 crore, up 54% from Rs 50,319 crore in August 2020. The overall number of cards in force has increased from 5.8 crore to 6.4 crore in the same period.

“Looking at total spends, since November 2020, ICICI has gained around 510 basis points market share, while HDFC Bank and SBI cards have lost around 285bps and 90bps market share, respectively. ICICI Bank’s total spends for July 2021 was equal to that of SBI cards despite ICICI Bank’s market share (based on outstanding cards) being lower than that of SBI Cards. We believe, ICICI’s co-branded card with Amazon (1.6 millon as of March 2021), which forms more than 50% of incremental card additions, has helped it to scale up its credit card business in a significant way,” said Suresh Ganapathy, an analyst with Macquarie research.

To boost credit card spending, HDFC Bank on Tuesday launched its Festive Treats 3.0 campaign, which will provide offers on cards, loans and EMIs. The bank has partnered with over 10,000 merchants across 100 locations as it expects customers to return to offline shopping following a dip in Covid cases and increased pace of vaccinations. “This year we have come out with more offline offers including hyperlocal merchants. We will use our ATM platform to inform customers about the offers around their location,” said Parag Rao, group head (payments, consumer finance, digital banking and IT).

HDFC Bank continues to be the market leader with 26.5% of total credit card spending in India. However, the bank’s share has fallen from August 2021, when it accounted for 28.7% of the total spend. Sequentially, HDFC Bank had seen a dip in credit cards in force as the RBI ban was still in force for most of the month. Since the ban was lifted the bank had added four lakh credit cards to its base of 1.47 crore cards as of August 2021.

The biggest loser in terms of share of spending is Citibank, which led the ranking in terms of card spend for many years. The multinational, which had a 7.8% share of spends in 2020 now accounts for 4.9% of spending. IDFC First Bank, a relatively late entrant, has managed to make a dent by increasing its share of card spend to over 1%. American Express is the only multinational bank to grow its share of spending from a year-ago period. However, the US issuer also faces an embargo on issuing new cards until it complies with data localization norms, which is likely to hit growth.



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RBI deadline to stop storage of card details worries start-ups

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With the deadline to implement an RBI norm that prohibits payment gateways and payment aggregators from storing customer card details closing in, consumer tech start-ups are a worried lot.

Accepting the diktat could reduce the ease of payments for half a billion Internet users in India.

This could even increase barriers of entry for the next billion Internet users who are just getting hold of technology services like food delivery, online retail, and on-demand video streaming.

The RBI had suggested tokenisation as a measure for non-bank payment aggregators to replace actual card details of customers with an alternative code termed as ‘token’. The token has to be unique for a combination of card, token requestor (an entity that accepts tokenisation request from the customer and sends it to the card network to issue a token), and device.

The safety provided by tokenisation is that if a company is hacked, the hacker cannot use that data for another platform.

One device, one card

But in tokenisation, the consumers will only be able to use one card to make transactions on one device. Each platform will generate a unique token corresponding to the user’s card and device.

On the challenges attached to tokenisation, Rameesh Kailasam, CEO of Indiatech, told BusinessLine, “The ecosystem may not be ready for such measures, because companies will be expected to create a token with each payment aggregator/payment gateway which will override the intent of recurring payments. Essentially, customers will not have the feasibility of placing repeat orders, making EMI payments, and standing transactions against their card.”

The RBI rule on stopping card storage was initially given an implementation deadline of July but was later extended to January 2022 following industry demand.

Indiatech.org, an industry association of Indian start-ups including Ola, hike, Makemytrip, and Nykaa among others, has recommended that companies that are able to afford industry certifications like Payment Card Industry Data Security Standard (PCI DSS) Level 1 be allowed to save customer’s card details with necessary reporting and audit mechanisms built to inform the RBI. Further, it suggested that beyond-device tokenisation should be allowed.

The central bank’s motive to bring these rules was to guard customer data against frequent data breach cases in tech companies. Cybercrime cases in India have grown exponentially since the pandemic. Per data shared by the Union Minister of State for Home Affairs, G Kishan Reddy, in the Lok Sabha in March, between August 30, 2019, and February 28, 2021, as many as 3.17 lakh cybercrime incidents were registered on the National Cyber Crime Reporting Portal.

Data security

Commenting on the relation of data security issues with companies’ storing customer card details, independent security researcher, Rajashekhar Rajaharia said, “Storing customer data is not what leads to data breaches. It is weak and, in some cases, outdated encryptions used by the Internet companies that expose them to data leaks and hackers.

“In addition to this, the Indian government also needs to conduct data audits of companies as done in countries like the US and Europe,” he added.

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SBI Card expects to return to ‘business-as-usual’ in Sept quarter

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The second Covid-19 wave may have, to some extent, dented SBI Card’s business growth in May, albeit on a lower scale than May last year, but the company sees a return to business -as-usual (BAU) scenario in the July-September quarter, its Chief Executive Officer Rama Mohan Rao Amara said.

However, the return to BAU depends on the pace of vaccination, return of consumer confidence and India being able to avoid a third wave, he told BusinessLine.

The first two months of this fiscal (April-May 2021) saw increased overall card spends as well as higher onboarding of customers compared to the same period last year.

“If we are able to avoid another wave before March 2022, I don’t have any doubt that our performance in the current fiscal will be equal to our performance last year or even better,” he said.

Rao highlighted that the impact of the second wave on SBI Card, which is the country’s largest pure play credit card issuer, was more in May and not much in April.

“Retail spends in April were not impacted adversely. It was a marginal impact and we were holding on. It was also much better than April 2020 when it was a national lockdown,” he said.

“We are confident that this (impact in May) is only a temporary blip and see customer confidence coming back and the expenditure that was postponed due to pandemic will return,” he said.

Dip in spends

Overall there has been a dip in credit card spends in May but certain new categories are seeing an increase, he said. Several State governments decision to restrict e-commerce deliveries to only essential items impacted overall business as online spends on discretionary items saw a dip in May, Rao added.

In quarter ended March, SBI Card’s card spend grew 11 per cent to ₹35,943 crore on a year-on-year basis.

Rao said he expects calibrated opening by States from June onwards. “From July onwards, we want to come back to our usual ability of sourcing (new customers). Our endeavour will be to achieve sustainable growth. We want to play up to our capacity and that is the minimum goal,” he said, adding that SBI Card had on boarded 26.85 lakh accounts last fiscal.

He also said that SBI Card — as was the case last year — would, in the subsequent quarters, catch up with the lost business of the first quarter.

On whether health spends through credit cards are on the rise in the current pandemic times, Rao said there is some bump up and new segments like online consultations are on the rise. “We are seeing usage in increase in spends on wellness through our card portfolio,” he said.

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Depositors seek end to ATM ‘decline fee’, BFSI News, ET BFSI

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The All India Bank Depositors’ Association of India in their pre-policy meeting with RBI governor Shaktikanta Das have asked for the withdrawal of an “unjust” ‘transaction decline charge’ on debit cards.

Each time a person without adequate balance in his/her account tries to withdraw cash from an ATM or uses debit cards to make a payment, the bank penalises him/her Rs 25 plus GST as ‘transaction decline’ charge. This can be termed as the digital version of a charge for bouncing a cheque.

“Such exorbitant penalty for digitally paying consumers ‘disincentivises’ them, thereby many are moving away from digital payments. This applies more to the marginalised class of depositors who may not always have adequate funds in their accounts,” the association said in its written representation.

The body said that these charges are not only unjust but also against the principle of ‘transaction decline’ as this is not like issuing a cheque to a third-party but like a depositor walking into a branch and trying to draw cash. Also, there is no cost to the card-issuing bank in such transactions.

“The NPCI does not consider it as a transaction and hence no interchange is paid by the card-issuing bank,” the letter said. “Though, we can still understand that as a deterrent, banks charge for cheque bounce, where cheque/ECS returns involve third parties and create distrust in the payment mode. However, declined POS/ATM transactions due to insufficient balances is nowhere on a par with cheque/ECS returns. It does not involve any intent of systemic inconvenience or distrust to a third party,” the bank said.

In its representation to the RBI, the association said that prior to January 2020, SBI was charging Rs 17.7 per non-cash digital transaction for over 12 crore basic savings bank deposit accounts. “SBI has agreed to refund the exorbitant charges only for the period starting January 2020, but not prior to that. As disclosed by SBI, during FY20, SBI collected over Rs 150 crore towards service charges from such accounts,” the association said.

Another wrongful charge highlighted by the association was the one imposed by payment aggregators on consumers for making digital payments on e-commerce websites. While the merchants and the banks claimed that they were not the ones pocketing the charge, they did facilitate these charges. which were against the government mandate.

The association also urged the RBI governor not to cut interest rates as inflation has been high and oil prices were firming up.



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Researcher, BFSI News, ET BFSI

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Independent cybersecurity researcher Rajshekhar Rajaharia claimed on Sunday that data of nearly 10 crore credit and debit card holders in the country is being sold for an undisclosed amount on the Dark Web.

According to Rajaharia, the massive data dump on the Dark Web has been leaked from a compromised server of Bengaluru-based digital payments gateway Juspay.

JusPay told IANS that no card numbers or financial information were compromised during the cyber-attack and the actual number is much lower than the 10 crore-figure being reported.

“On August 18, 2020, an unauthorised attempt on our servers was detected and terminated when in progress. No card numbers, financial credentials or transaction data were compromised,” a company spokesperson said in a statement.

“Some data records containing non-anonymised, plain-text email and phone numbers were compromised, which form a fraction of the 10 crore data records,” the spokesperson added.

However, Rajaharia claimed that the data was being sold on the Dark Web for an undisclosed amount via cryptocurrency Bitcoin.

“For this data, hackers are also contacting via Telegram,” he told IANS.

According to him, PCI DSS (Payment Card Industry Data Security Standard) have been followed by Juspay in storing users’ card information.

“However, if the hackers can find out the Hash algorithm used to generate the card fingerprint, they will be able to decrypt the masked card number. In this condition, all 10 crore cardholders are at risk,” Rajaharia noted.

The company admitted that the hacker gained access to one of Juspay’s developer keys and was spawning new computation servers in the developer account, trying to gain access to any accessible data.

Juspay, however, said the masked card numbers that have been leaked are not considered sensitive as per compliance.

Only “few” phone numbers and email addresses have been leaked which have dummy values, the spokesperson said, adding that it had intimated its merchant partners about the data leak the very same day.

“No card numbers (like 16-digit card number and other financial credentials) were accessed, as it is stored in a completely different isolated system. No transaction or order information was compromised,” the company spokesperson informed.

“We are making long-term investments for strengthening security and data governance with industry experts,” the company said.

Founded in 2012, Juspay last year raised $21.6 million in its Series B funding round.

The round was led by Sweden’s Vostok Emerging Finance (VEF), which invested $13 million in the technology firm, marking its first investment in the country.



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