PhonePe said Thursday that it had flagged 14 million credit and debit cards on its platform by the Reserve Bank of India’s (RBI) information security requirements.

The Walmart-backed company said it had flagged over 80% of active user cards since the campaign began in December 2021. Tokenisation replaces the card number with an alternate code called a “token”. Tokenised transactions are more secure because the actual card details are not shared with the merchant during the transaction process, reducing the chance of information leakage.

PhonePe said it is working with the three major credit card networks, Visa, Mastercard and RuPay, to meet the regulator’s September 30 deadline for tokenisation.

The digital payments company started processing token-based transactions in April, and nearly all eligible transactions are processed through tokens.

The company said in a statement that transactions processed through the token on PhonePe have improved by about 2% over the past few weeks compared to card-based transactions.

As token-based transaction processing has yet to gain traction, the Reserve Bank of India July extended the deadline for cards to apply for tokenisation to September 30. This is the third such expansion and perhaps the last.

While extending the deadline, the RBI said the industry should use the extended time to facilitate all stakeholders’ preparation for tokenised transactions. The regulator also requires payment participants to raise public awareness of the process of creating tokens and transacting using them.

Deep Agrawal, Head of Payments at PhonePe, said: “We believe card tokenisation is a very progressive move by the RBI, and we are on track to meet the September 30 deadline.”

“The PhonePe Safecard solution enables our users and merchant partners to continue to experience the convenience and increased security of saving card transactions. Customers’ card details are held only by the issuing bank and the card network, reducing the risk of data breaches and transactions and minimising fraud. For merchants, safer transactions translate into consumer confidence in using cards on online platforms, helping merchants witness an increase in overall transaction volume,” he said.

Many other payment platforms have developed tokenisation solutions based on RBI requirements for memory card details. Online payment solutions provider PayU has launched the “PayU Token Hub”, offering network tokens and issuer tokens under one Hub. Razorpay has developed “Razorpay TokenHQ”, a multi-NIC file tokenisation solution.
The National Payments Corporation of India (NPCI) works with brands and aggregators to launch tokenisation facilities.