Visa has released a feature that allows customers to conduct online transactions without entering the cardholder verification value (CVV) if the card has been tokenized. The CVV-free feature introduced in India aims to improve the efficiency of online transactions.
Merchants who use this will no longer have to ask customers for their CVV on every domestic transaction. They will only validate the three-digit number on the back of the card once when tokenizing the card.
Tokenization protects transactions by masking card data with a unique code. Tokenized transactions are two-factor authenticated, once at the moment of tokenization and again when the OTP is entered.
Tokenization eliminates the need for people to enter information such as the 16-digit debit or credit card number, CVV, and expiration date on merchant websites every time the person is performing a transaction. It protects the user from cyber fraud because online retailers do not keep client card data but just tokens. Furthermore, the same token cannot be used on any other merchant platform.
“Tokenization is widely used in the mainstream e-commerce space.” By deleting the CVV, we want to make the payment process quicker and more frictionless. “What we are saying now is that the role of a CVV in a tokenized card transaction is limited, and we are working with the industry to remove it,” Ramakrishnan Gopalan, Visa’s head of products for India and South Asia.
Visa’s CVV-free solution is now available to large merchants such as Zomato and payment service providers such as Razorpay. Visa’s new offering comes as the card company has stopped ‘Visa Safe Click,’ its single-click checkout service for online transactions, as the Reserve Bank of India continues to press payment providers to tighten their pockets.
In 2019, the firm announced the Visa Safe Click service, which eliminates the requirement for CVV or OTP for transactions under Rs 2,000. This comes after the RBI relaxed two-factor authentication for online card transactions up to Rs 2,000 in 2016 in order to stimulate digital payments.
“For the time being, we have decided to pause Safe Click and will not remove it from the market,” Gopalan explained.
“CVV-free and Safe Click are complementary market solutions that both aim to improve convenience.” “If the transaction is less than Rs 2,000, there is a possibility that we can merge both of these,” Gopalan added. “In the best-case scenario, combining the no-CVV experience with an evolved Safe Click experience will result in a super-seamless payments journey.”
Issues With Tokenization
The RBI continuously delayed the deadline for card tokenization to October of last year. Until June of last year, large merchants were concerned about the scalability of the payments network for tokenization and the overall readiness of the ecosystem, fearing disruptions in consumer payment experiences. They are, however, increasingly embracing tokenization. Visa claims to have issued over 250 million tokens in India as of March 2023.
Tough Competition To UPI
The card payment industry is currently under a serious challenge from the Unified Payments Interface (UPI) infrastructure for online payments, as UPI provides simplicity of use through a PIN.
With the new checkout choices, Visa, the country’s largest card system, hopes to keep ahead of the competition and ensure that consumers checking out of their online transactions have a comparable experience on stored cards as they do on UPI.
According to the RBI statistics issued recently, the total debit and credit transactions in the country in February is totaled 458.8 million and valued at Rs 1.68 lakh crore.
In comparison, figures from the National Payments Corporation of India reveal that total UPI transactions in February were more than 7.53 billion, with payments totaling Rs 12.35 lakh crore, demonstrating the popularity of the payments infrastructure.