Apple says it will stop accepting credit and debit card payments for app purchases and subscriptions through its Apple store starting June 1 to comply with the Reserve Bank of India’s (RBI) upcoming guidelines on card storage and tokenization.
Apple broke the news to Indian customers via an email, saying that they will no longer be able to use credit and debit cards on the App Store or other Apple services. Apple added that it will also no longer store card information on file to protect users.
The company has now asked customers in India to use either net banking or add UPI as a payment method. Apple users can also add funds to their Apple ID balance to continue recurring payments for apps and services like iCloud and AppleTV+.
RBI, India’s central bank, barred payment aggregators and gateways from storing customer card credentials in their database in March 2020. It initially set a deadline of June 30, 2021 for companies to comply but extended it twice following lobbying from several industry stakeholders seeking more time to comply.
The RBI directive on auto-debit requires companies to seek validation from the user before processing any payments made through credit or debit cards. Additionally, another directive from RBI says any company storing card details of users on their websites or apps will have to purge those details.
In the absence of an option to store card details, card networks such as Visa, Mastercard and RuPay along with banks, PAs and PGs are working on implementing Card on File Tokenization (CoFT).
CoFT replaces card details with a ‘token’ that will be unique for every debit or credit card and merchant platform where the card is used. Reports suggest that Apple’s move implies that there could be major disruptions starting July 1 when CoFT is implemented.
A report by the Indian Express newspaper suggested that an estimated 5 million customers who have stored their card details for online transactions on various platforms could be impacted if online players and merchants are not able to implement the changes in their backend.
Last year, Apple advised its developers that Apple Search Ads will no longer accept payments from credit cards issued by banks in India due to the RBI directives, and that all campaigns using a credit card issued from a bank in India would be placed on hold.
Apple also suggested developers promote payments using Apple ID wallets.
Apple’s iPhones accounted for just 3.3% of smartphone shipments in India during the January-March quarter, according to data from Counterpoint Research. Reports suggest that Apple’s iOS operating system has just under 5% market share.