Visa pauses single-click checkout for Indian ecommerce transactions

In 2019, Visa launched ‘Visa Single Click’ in India to enable a smooth checkout for consumers buying goods online worth up to Rs 2,000. This feature did not need CVV (card verification value) or OTP (one-time password) to be punched in while making a transaction.

Visa said it voluntarily paused this service in the Indian market.

“Visa is working on an evolved form of network authentication product under RBI guidelines,” the company said in a statement, responding to ET’s questions. “Visa cardholders can continue to use their cards with additional factor authentication for ecommerce transactions, ensuring a secure payment experience. Our priority is to provide safe, secure and compliant payment solutions in India and globally.”

Payment aggregators like Razorpay and Paytm had integrated this service for select Visa cardholders. Some large ecommerce players such as food delivery platforms and others went live with this service, too.

SBI Card, Axis Bank, Kotak Mahindra Bank, ICICI Bank and many others also supported these transactions. But many of them informed their customers that from March 18 that this service has been halted. ETTech has seen such communication.

Discover the stories of your interest

The service attained popularity within a very short period of time. In a blog post in February 2021, Paytm said that 250,000 people enrolled for the service within 45 days of its launch.Ease of payments vs security

Card payment companies started offering the single-click checkout feature after the RBI in 2015 offered relaxation in additional factors of authentication.

For contactless payments through the tap-and-pay method, the RBI allowed transactions worth up to Rs 2,000 to go through without the pin which is the second factor of authentication. In 2020, this limit was extended to Rs 5,000.

“This opened an opportunity for payment players to look at faster checkout experiences for ecommerce consumers where Visa Safe Click came in,” said the founder of a large payment gateway company. “However, the RBI was not happy with this and brought it to a halt.”

As per the thinking of the central bank, a swipe at a point-of-sale terminal has the additional security of the card being present, hence it made sense to allow the transaction to go through without a pin. But in the case of an ecommerce purchase, it is a “card not present” transaction where the RBI wants OTP to be mandatory.

“Even with Visa’s 3D secure protocol, perhaps it did not make the cut of Indian regulatory standards, which shows the importance the RBI gives to the entire OTP leg,” another top executive at a payments startup said.

Cards vs UPI

Industry insiders pointed out that single-click checkouts could build a more convenient checkout experience than even those based on Unified Payments Interface (UPI).

Small-value recurring transactions are all moving into UPI. Hence, saved cards with single-click checkout are very important to ensure these transactions continue through card rails.

ETtech

Besides ease of use, a single-click checkout was expected to increase the success rates of such transactions, which otherwise are under 80%.

OTP is one major leg where transaction failures happen. And it is also common for customers to punch in the wrong CVV numbers for their cards.

In a press statement in 2019, Visa’s then country head TR Ramachandran said Visa Safe Click would help ecommerce platforms deal with issues around cart abandonment, connectivity challenges and incorrect passwords. With the latest diktat from the regulator, consumers will have to punch in CVV and OTP again.

Higher security standards

The RBI has been pushing for higher security standards for digital payments across sectors. It mandated tokenisation in 2019 so that saved card details would be safe even in case of a cyberattack on ecommerce portals.

It also mandated payment aggregator licences, which had stringent audit requirements for all online payment service providers. Players like Razorpay and Cashfree have all applied for a licence and are currently operating with in-principle approvals. Players like PayU and Paytm are still getting their applications evaluated.

“Overall, the regulator is hardening its stance regarding matters around customer safety even if it comes at the cost of convenience,” said one of the executives cited earlier in the story.

The action on Visa can also be understood in the same context. It is now up to the company to come up with new technology which can impress the regulator by adhering to the safety standards and can offer ease of use for users.