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With reference to ‘Card Tokenization guidelines’ announced by Reserve Bank of India (RBI), consider the following statements
- Tokenization refers to replacement of card details with an alternative code for every transaction
- No entity in the card transaction/payment chain shall store the actual card data for more than 2 months
- The guidelines are applicable to every device that connects with the internet including wrist watches, bands
Select the correct statements using the appropriate code given below
- a)1 and 2 only
- b)2 and 3 only
- c)1 and 3 only
- d)1, 2 and 3
Correct answer is option 'C'. Can you explain this answer?
Most Upvoted Answer
With reference to ‘Card Tokenization guidelines’ announced...
Statement Analysis:
Statement 1
Correct
Tokenization refers to replacement of card details with an alternative code called a ‘token’, which is unique for a combination of card, token requestor (the entity that accepts a request from the customer for tokenization of a card and passes it on to the card network to issue a token) and the device
Statement 1
Correct
Tokenization refers to replacement of card details with an alternative code called a ‘token’, which is unique for a combination of card, token requestor (the entity that accepts a request from the customer for tokenization of a card and passes it on to the card network to issue a token) and the device
Statement 2
Incorrect
With effect from January 1, 2022, no entity in the card transaction/payment chain, other than the card issuers and/or card networks, shall store the actual card data.
Incorrect
With effect from January 1, 2022, no entity in the card transaction/payment chain, other than the card issuers and/or card networks, shall store the actual card data.
Statement 3
Correct
The guidelines extend the tokenization guidelines to every device that connects with the internet, including mobile phones, tablets, laptops, desktops, wrist watches, bands, Internet of Things devices as well as payment aggregators.
Correct
The guidelines extend the tokenization guidelines to every device that connects with the internet, including mobile phones, tablets, laptops, desktops, wrist watches, bands, Internet of Things devices as well as payment aggregators.
Context – RBI recently announced new guidelines for card tokenization.
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With reference to ‘Card Tokenization guidelines’ announced...
Understanding Card Tokenization Guidelines
The Reserve Bank of India (RBI) has implemented guidelines to enhance the security of card transactions through tokenization. Let’s analyze the statements provided in the question to determine which are correct.
Statement 1: Tokenization refers to replacement of card details with an alternative code for every transaction
- This statement is correct. Tokenization is a process where sensitive card information is replaced with a unique identifier or token. This token is used for processing transactions, ensuring that actual card details are not exposed during the transaction, thereby enhancing security.
Statement 2: No entity in the card transaction/payment chain shall store the actual card data for more than 2 months
- This statement is correct. According to RBI guidelines, entities involved in the card transaction process are prohibited from storing actual card data beyond a defined period (2 months). This rule aims to minimize the risk of data breaches and enhance consumer protection.
Statement 3: The guidelines are applicable to every device that connects with the internet including wrist watches, bands
- This statement is incorrect. While the guidelines apply broadly to devices that process payments, the focus is primarily on payment systems and service providers, not every internet-connected device. Therefore, not all devices like smart watches or bands fall under the same regulatory requirements.
Conclusion
Based on the analysis above:
- The correct answer is option 'C' (1 and 3 only).
- Statements 1 and 2 are accurate and reflect the RBI's intent to secure card transactions, while statement 3 does not accurately represent the applicability of these guidelines.
This understanding is crucial for compliance and enhancing security in digital payment systems.
The Reserve Bank of India (RBI) has implemented guidelines to enhance the security of card transactions through tokenization. Let’s analyze the statements provided in the question to determine which are correct.
Statement 1: Tokenization refers to replacement of card details with an alternative code for every transaction
- This statement is correct. Tokenization is a process where sensitive card information is replaced with a unique identifier or token. This token is used for processing transactions, ensuring that actual card details are not exposed during the transaction, thereby enhancing security.
Statement 2: No entity in the card transaction/payment chain shall store the actual card data for more than 2 months
- This statement is correct. According to RBI guidelines, entities involved in the card transaction process are prohibited from storing actual card data beyond a defined period (2 months). This rule aims to minimize the risk of data breaches and enhance consumer protection.
Statement 3: The guidelines are applicable to every device that connects with the internet including wrist watches, bands
- This statement is incorrect. While the guidelines apply broadly to devices that process payments, the focus is primarily on payment systems and service providers, not every internet-connected device. Therefore, not all devices like smart watches or bands fall under the same regulatory requirements.
Conclusion
Based on the analysis above:
- The correct answer is option 'C' (1 and 3 only).
- Statements 1 and 2 are accurate and reflect the RBI's intent to secure card transactions, while statement 3 does not accurately represent the applicability of these guidelines.
This understanding is crucial for compliance and enhancing security in digital payment systems.
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Question Description
With reference to ‘Card Tokenization guidelines’ announced by Reserve Bank of India (RBI), consider the following statements Tokenization refers to replacement of card details with an alternative code for every transaction No entity in the card transaction/payment chain shall store the actual card data for more than 2 months The guidelines are applicable to every device that connects with the internet including wrist watches, bandsSelect the correct statements using the appropriate code given belowa)1 and 2 onlyb)2 and 3 onlyc)1 and 3 onlyd)1, 2 and 3Correct answer is option 'C'. Can you explain this answer? for UPSC 2025 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about With reference to ‘Card Tokenization guidelines’ announced by Reserve Bank of India (RBI), consider the following statements Tokenization refers to replacement of card details with an alternative code for every transaction No entity in the card transaction/payment chain shall store the actual card data for more than 2 months The guidelines are applicable to every device that connects with the internet including wrist watches, bandsSelect the correct statements using the appropriate code given belowa)1 and 2 onlyb)2 and 3 onlyc)1 and 3 onlyd)1, 2 and 3Correct answer is option 'C'. Can you explain this answer? covers all topics & solutions for UPSC 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for With reference to ‘Card Tokenization guidelines’ announced by Reserve Bank of India (RBI), consider the following statements Tokenization refers to replacement of card details with an alternative code for every transaction No entity in the card transaction/payment chain shall store the actual card data for more than 2 months The guidelines are applicable to every device that connects with the internet including wrist watches, bandsSelect the correct statements using the appropriate code given belowa)1 and 2 onlyb)2 and 3 onlyc)1 and 3 onlyd)1, 2 and 3Correct answer is option 'C'. Can you explain this answer?.
With reference to ‘Card Tokenization guidelines’ announced by Reserve Bank of India (RBI), consider the following statements Tokenization refers to replacement of card details with an alternative code for every transaction No entity in the card transaction/payment chain shall store the actual card data for more than 2 months The guidelines are applicable to every device that connects with the internet including wrist watches, bandsSelect the correct statements using the appropriate code given belowa)1 and 2 onlyb)2 and 3 onlyc)1 and 3 onlyd)1, 2 and 3Correct answer is option 'C'. Can you explain this answer? for UPSC 2025 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about With reference to ‘Card Tokenization guidelines’ announced by Reserve Bank of India (RBI), consider the following statements Tokenization refers to replacement of card details with an alternative code for every transaction No entity in the card transaction/payment chain shall store the actual card data for more than 2 months The guidelines are applicable to every device that connects with the internet including wrist watches, bandsSelect the correct statements using the appropriate code given belowa)1 and 2 onlyb)2 and 3 onlyc)1 and 3 onlyd)1, 2 and 3Correct answer is option 'C'. Can you explain this answer? covers all topics & solutions for UPSC 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for With reference to ‘Card Tokenization guidelines’ announced by Reserve Bank of India (RBI), consider the following statements Tokenization refers to replacement of card details with an alternative code for every transaction No entity in the card transaction/payment chain shall store the actual card data for more than 2 months The guidelines are applicable to every device that connects with the internet including wrist watches, bandsSelect the correct statements using the appropriate code given belowa)1 and 2 onlyb)2 and 3 onlyc)1 and 3 onlyd)1, 2 and 3Correct answer is option 'C'. Can you explain this answer?.
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