The CVV-free feature launched in India is aimed at making the online transaction process smoother.
The merchants who adopt this will not have to ask customers for their CVV every time they do a domestic transaction. They will be verifying this three-digit number on the back of the card only once, at the time of tokenising the card.
Tokenisation masks the card details with a unique code, making the transactions more secure. Tokenised transactions are two-factor authenticated, one at the time of tokenisation and later at the time of putting the OTP.
Tokenisation removes the need for a customer to put details such as the 16-digit debit or credit card number, CVV and the expiry date at merchant websites every time the person makes a transaction. It secures the user from cyber frauds, as online merchants don’t save the card data of customers but only the tokens. Also, the same token cannot be used on other merchant platforms.
“Tokenisation is being adopted in the mainstream ecommerce space well. We are now wanting to make the payment experience faster and more friction-free by removing the CVV. What we are saying now is that in a tokenised card transaction, the role of a CVV is limited and we are working with the industry to remove it,” Ramakrishnan Gopalan, head of products, India and South Asia at Visa, told ET.
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Large merchants such as Zomato and payment service providers including Razorpay are live with the CVV-free solution from Visa.Visa’s new product comes at a time when the card major has paused ‘Visa Safe Click’, its single-click checkout service for online transactions, as the Reserve Bank of India continues to push payment players to tighten their security standards.
The company had launched the Visa Safe Click service in 2019, to eliminate the need for CVV or OTP for transactions below Rs 2,000. That after the RBI in 2016 eased the two-factor authentication for online card transactions up to Rs 2,000 to encourage digital payments.
“At present, we have decided to pause Safe Click and will not withdraw it from the market,” Gopalan said.
If Visa gets the regulator’s approval, it may look at combining both products, he said.
“Both CVV-free and Safe Click are complementary solutions in the market, and they both aim to improve convenience. There is a potential opportunity that we can merge both of these, assuming the transaction is less than Rs 2,000,” Gopalan said. “So, in the most optimistic scenario, if we could combine the no-CVV experience with an evolved Safe Click one, it will make for a super-seamless payments journey.”
Tokenisation issues
The RBI had pushed the deadline for card tokenisation repeatedly to October last year. Until June last year, large merchants were unsure about the scalability of the payments network for tokenisation and the readiness of the entire ecosystem as they feared disruptions in the payment experiences of consumers.
But they are now increasingly adopting tokenisation. As of March 2023, Visa claims to have issued over 250 million tokens in India.
Tough competition from UPI
At present, the card payment industry is finding a stiff challenge from the Unified Payments Interface (UPI) infrastructure for ecommerce payments given UPI brings ease of use through a PIN.
With the new checkout options, Visa, the largest card scheme in the country, wants to stay ahead of the race and ensure that consumers checking out of their online transactions get a similar experience on saved cards vis a vis UPI.
Also read | UPI merchant payments to reach $1 trillion by FY26: Report
According to latest RBI data, total debit and credit transactions in the country totalled 458.8 million in February, worth Rs 1.68 lakh crore.
In comparison, National Payments Corporation of India data show total UPI transactions in February to be more than 7.53 billion, processing payments worth Rs 12.35 lakh crore, underscoring the popularity of the payments infrastructure.
