Online merchants can lose up to 20-40 per cent of their revenues after December 31, after which merchants will not be able to store card information of users and will have to replace each card number with a randomised token number, industry body CII said on Wednesday.

This was brought out at a virtual session on ‘Digital Payments and the India Media Consumer’ which was organised by CII’s Media and Entertainment Committee.

The aim of the session was to bring to light the problems consumers were going to face from next year due to the RBI deadline of December 31 for tokenisation, CII said in a statement.

This means that from January 1, merchants will not be able to store card information of users and will have to replace each card number with a randomised token number, it added.

“Online merchants can lose up to 20-40 per cent of their revenues post 31 December, and for many of them, especially smaller ones, this would sound the death knell, causing them to shut shop,” it added.

Sijo Kuruvilla George, executive director of Alliance of Digital India Foundation (ADIF), said merchants will lose out in this process for no fault of theirs and they cannot create tokenisation infrastructure under the RBI rules.

Tech integration, loss of revenue and customer education were squarely falling on the merchant, and they had no time to do it all because of a lack of upstream readiness or commitment in the matter, George said.

India has an estimated 98.5 crore cards, which are used for about 1.5 crore daily transactions worth Rs 4,000 crore, CII said.

The value of the Indian digital payments industry in 2020-21, as per the RBI’s annual report, was Rs 14,14,85,173 crore, it said adding that digital payments have triggered and sustained economic growth, especially through the trying times of the pandemic.

While the Reserve Bank of India’s (RBI) intent is to protect consumer interest, the challenge on the ground pertains to implementation, it added.

For a tokenisation solution to be consumer-ready (i.e. for consumers to be able to complete transactions successfully using tokens instead of their card information), the solution should have completed three steps, it said.

The steps include token provisioning and token processing and scale-up for multiple use cases.

“However, India is nowhere near having completed these three steps, and rushing through with tokenisation without adequate system preparedness is going to have a negative impact on transactions,” it said.