BENGALURU: With an aim to enhance convenience for cardholders, the Reserve Bank of India (RBI) on Friday proposed to introduce Card-on-File Tokenisation (CoFT).
RBI Governor Shaktikanta Das said, "Given the growing acceptance and benefits of tokenisation of card data, it is now proposed to introduce Card-on-File Tokenisation (CoFT) creation facilities directly at the issuer bank level."
This measure will enhance convenience for cardholders to get tokens created and linked to their existing accounts with various e-commerce applications.
The central bank has also decided to extend the Payments Infrastructure Development Fund (PIDF) Scheme, which was launched in January 2021.
The scheme has enabled more than 2.66 crore new payment touchpoints across the country. Now, it will be extended by another two years till December 31, 2025.
"The coverage of PIDF scheme is also being expanded to include the beneficiaries of PM Vishwakarma Scheme; and to deploy emerging modes of payment acceptance, such as soundbox and Aadhaar-enabled biometric payment acceptance devices," Das said.
These measures will further accelerate the Reserve Bank’s efforts to promote digital payments at the grassroots level, he added.
Experts say the introduction of card-on-file tokenisation directly at the bank level is a game changer for both cardholders as well as the financial industry. Tokenisation will replace actual card details with an alternate code called the token.
If a consumer uses a tokenised card transaction, it is safer as the card details are not shared with the merchant. At present, one has to enter either the debit or credit card transaction details.
"It enhances convenience and security, reducing the friction associated with digital transactions. This forward-looking initiative reflects the RBI's commitment to fostering a robust and secure payments landscape in India," said Rajsri Rengan, India Head of Development, Banking and Payments, at FIS.