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) at the issuer bank level.
Currently, CoF tokens can only be created through the merchant’s application or webpage. Experts say this will revolutionise the country’s e-commerce landscape and will enhance the security of online transactions. RBI Governor Shaktikanta Das said CoFT creation facilities directly at the issuer bank level.
This will enhance the convenience for cardholders to get tokens created and linked to their existing accounts with various e-commerce applications. According to experts, 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 ‘token’.
If a consumer uses a tokenised card transaction, it is safer as the card details are not shared with the merchant. Currently, one has to enter either debit or credit card transaction details. Rahul Jain, CFO, of NTT DATA Payment Services India, said this process poses minimal challenges for issuer banks, as most of them can leverage the existing unified payment framework for token creation.
“Tokenisation represents a crucial reform that greatly enhances the security of online transactions. CoF Tokenisation, in particular, adds an extra layer of protection to card credentials, making it essential for every cardholder to utilise this feature to safeguard their data, which would otherwise be vulnerable during card transactions,” he said. Khilan Haria, SVP & head of payments product, Razorpay said this will empower cardholders to create tokens across frequently used merchants, eliminating payment friction and the need to manually enter card data.