Razorpay Launches 'TokenHQ' to help businesses comply with RBI guidelines

In a bid to further enhance the safety of online transactions, the Reserve Bank of India (RBI) has issued a new set of guidelines that bar businesses, payment aggregators and acquiring banks from storing customers’ credit, debit and prepaid card information. The new rules allow only card networks and card issuers to store customer card information. They sanction businesses to use tokens for offering saved card experience during online payments. Card-On-File (COF) tokenisation is the process of turning sensitive cardholder data into a string of randomly generated numbers called a "token”, which has no meaningful value if breached. All stakeholders are required to ensure full compliance with the tokenisation framework by 31st December 2021.

To help millions of Indian businesses comply with the new RBI guidelines, fintech unicorn Razorpay has announced the launch of ‘Razorpay TokenHQ’ a  multi-network Card-on-File (CoF) Tokenisation solution. This will be a turnkey solution for businesses, allowing their end-customers to continue experiencing the convenience of saved card transactions, now with added security and in compliance with RBI guidelines. TokenHQ will work across all major card networks including Mastercard, RuPay and Visa. Almost the entire base of 5 million businesses using Razorpay’s services will be ready to support tokenised card transactions.

“The RBI has been making great strides to enhance the security and convenience of digital payments in India. Newer regulations offer tremendous opportunities for us to innovate and develop localised solutions that work well for Indian businesses,” said Shashank Kumar, CTO and Co-founder, Razorpay. “Tokenisation is one such regulatory development, and Razorpay TokenHQ is a homegrown solution that will enable businesses to continue to offer seamless payments while ensuring individuals have control over their card data.” He said India’s First Multi-Network tokenisation solution, ‘TokenHQ’, will work across all major card networks, thus enabling every business in India to tokenise customer card information.

In the past year, digital payment adoption in India grew over 2x, prompting the RBI to bring in a fresh set of regulations that safeguard consumer interests. The card tokenisation framework ensures that a customer’s card information rests only with the customer, the card network, and the issuing bank, which minimises the risk of card data leaks significantly. However, in the absence of tokenisation, customers will have to enter their card information manually each time they transact online. This leads to friction for the customers and increases chances of error in entering data leading to transaction failures. Owing to the hindrance in saving cards, businesses can expect their conversions to drop by 30 per cent. E-commerce, education, financial services, and D2C (direct to consumer) brands will also see a significant drop in revenues due to the inability to offer personalised offers and experiences based on customer card details.  

Tokenisation, as a technology solution bridges this inconvenience gap and enables customers and businesses to sustain “business as usual”, by converting customer card information into a coded “token”. Razorpay TokenHQ is available for all businesses; and merchants using other payment gateways can also use Razorpay’s solution to tokenise cards and route payments using their existing payment partnerships.

“There are over 950 million debit & credit cards in India and this number will only grow given the rise of non-cash transactions in India’s hinterlands,” said Kumar. “We hope to see a lot of developments in building smart, secure fintech solutions for businesses and their end-users in the times ahead.”

Using Razorpay TokenHQ, businesses would be able to create, process, delete and modify tokens for online card payments with customers’ consent. Razorpay TokenHQ enables the company’s existing customers (on standard and custom checkouts) to support card tokenisation at zero cost and effort. Merchants with customized setups can start integrating Razorpay TokenHQ immediately via our developer friendly APIs (application programming interface).

Over the past few months, RBI has introduced fresh guidelines, tightening the noose on digital payment security. Razorpay has been working on introducing solutions that help banks and businesses comply with the new rules.