How Tokenisation Can Help Businesses Reduce Cart Abandonment

Tokenisation

The Indian government with the help of the Reserve Bank of India (RBI), has continuously been improving the digital payment experience for customers and businesses alike.

Security being the top priority, the RBI has directed online businesses to stop storing users’ sensitive card details on their database without tokenising their cards.

One of the primary reasons for online businesses to save users’ cards is to improve their payment experience and reduce cart abandonment.

If you are wondering what tokenisation is and how implementing it decreases cart abandonment, this article is for you.

What is tokenisation?

The process of replacing users’ actual card details with randomly generated numbers or codes is called tokenisation. The codes that mask the actual 16-digit debit or credit card numbers are known as tokens.

A customer who uses the same card to shop on two different e-commerce sites will have two unique tokens for each e-commerce site. This is to ensure customers’ card details are safe even if the same card is used to shop on multiple platforms.

What is the RBI’s order on tokenisation?

In March 2020, the RBI made it mandatory for online merchants and payment gateways to store users’ tokenised debit and credit card details.

It gave them time till January 1, 2022, to stop saving users’ card details unless they are tokenised. Later, it postponed the deadline to June 30, 2022, which has now been further pushed to September 30 this year.

Features of Tokenisation

  • Enables safe and secure payment
  • Tokens are irreversible
  • A unique set of codes for every card and payment provider
  • Requires user’s consent
  • Safeguards users’ sensitive card details

Why is tokenisation important to reduce cart abandonment?

E-commerce companies have long been relying on saving their users’ cards to make their online payment experience smoother. By allowing users to save their cards, online businesses remove customers’ hassle of entering card details every time they shop.

Manually entering card details has been known as being one of the main hurdles of online payment and the top reason why customers abandon their carts on the checkout page.

Read More: Integrate With Paytm Token Gateway to Get Started With Tokenisation

However, by the end of September 2022, online merchants will have to either delete their users’ saved cards or allow them to save the tokenised version of their card details.

Online businesses that are not adept with tokenisation might start seeing a higher rate of cart abandonment as customers would not be able to shop using their saved cards.

Customers tend to trust an e-commerce platform that abides by the RBI’s directives, especially when it’s about secure digital payments. Considering this, customers would prefer shopping from an e-commerce site that allows saving tokenised cards.

Here are the three ways tokenisation can reduce cart abandonment:

  • Ability to save cards: Payments via saved cards have been single-handedly lowering businesses’ cart abandonment rates. With the RBI’s new directive, businesses can only save users’ cards by tokenising sensitive details.
  • Secure payments: Most of the customers abandon their carts at the checkout page fearing security loopholes. This is specifically true if they are shopping from a new website. With tokenisation, the RBI has made payments via saved cards more secure, which means fewer people abandoning their carts due to cold feet.
  • More users will save cards: Many users prefer to manually enter their card details every time they shop from a website as they don’t fully trust how secure their data will be. With tokenisation, customers’ sensitive card details are 100% safe as these tokens are irreversible and can’t be traced. This safety feature will result in more and more users coming forward to allow businesses to tokenise and save their cards for easy payments.
Tokenised card payment flow

Untokenised card payment flow

A user adds products to the cartA user adds products to the cart
Chooses her tokenised saved credit card to make the paymentManually types credit card details on the checkout page
Enters CVV and one-time-password to authorise the purchaseThree scenarios:

a) Gets a prompt that the credit card number is wrong. Either she types the details again or abandons her cart 

b) Enters CVV and one-time-password to authorise the purchase 

c) She could also abandon her cart due to the inconvenience of manually entering details or get cold feet and stop transaction

Waits for deliveryWaits for delivery

How Paytm Payment Gateway can help tokenise cards

For businesses, it’s extremely important that they partner with a payment gateway that has the tech capabilities to tokenise debit and credit card details.

Read More: NPCI Rolls Out Tokenisation Mechanism for RuPay Cards

The good news for merchants is that Paytm Payment Gateway can power their tokenisation drive.

Here is how Paytm Payment Gateway can tokenise cards

  • As per the RBI rules, customers must give their consent to tokenise their cards. As soon as the Paytm Payment Gateway receives the consent, the customer will receive an OTP, which they need to punch in to provide additional authentication.
  • Once the authentication is done, Paytm PG will send the tokenisation request to the respective card network.
  • Paytm PG will send a unique Token Index Number to the merchant. Token Index Numbers are unique and are mapped to the specific card as well as the e-commerce platform to which the customer gave consent.
  • Token Index Number will be needed for future card operations such as for generating token data, modifying token status, and fetching token information of a particular customer.

Frequently Asked Questions

After September 30, 2022, what happens to users’ cards that were already saved?

If businesses are not able to tokenise users’ cards that are already saved on their database, they will have to delete their details on or before September 30, 2022.

Can businesses tokenise cards on their own?

No, they can’t. The RBI has authorised card network companies such as Visa, Master Card, RuPay, etc to tokenise users’ cards. Paytm Payment Gateway has partnered with all the card network providers to help businesses with tokenisation.

How much time does tokenisation take for customers?

Tokenising cards is a quick process for customers as it only requires their approval and OTP validation. The whole process will not take more than 5 minutes.

What happens to the tokenised saved cards if a merchant’s database is hacked?

Even if a website’s database is compromised and all the details of tokenised saved cards are stolen, hackers can’t figure out users’ actual card details. Once customers’ debit and credit card details are tokenised the actual 16-digit card number and CVV are masked and can’t be traced back.

Fill Up The Form To Get Started With Tokenisation

You May Also Like
Accept Payments at Zero fees
Read More

Accept Payments Online at Zero Fees with Paytm

While there is no extra cost associated with making online payments on the consumer side, businesses need to pay certain charges. That’s the reason why they look for ways to accept payments at a 0% fee.