Tokenisation of Debit and Credit Cards


    In News 

    • The Reserve Bank of India (RBI) has extended the card-on-file (CoF) tokenisation deadline by three months to September 30, 2022, in view of various representations received from industry bodies. 
      • Card-on-file, or CoF, refers to card information stored by payment gateway and merchants to process future transactions. 


    • About:
      • It refers to the replacement of actual card details with an alternate code called the “token”, which shall be unique for a combination of card, token requestor (i.e. the entity which accepts a request from the customer for tokenisation of a card and passes it on to the card network to issue a corresponding token) and device (referred hereafter as “identified device”).
      • Under tokenisation services, a unique alternate code is generated to facilitate transactions through cards. 
      • This essentially means that a customer’s card information will no longer be available on any Merchant, Payment Gateway, or 3rd party that helps in the processing of digital transactions today.

    Benefits of Tokenization

    • Transaction safety: Tokenization reduces the chances of fraud arising from sharing card details.
    • Easy payments: The token is used to perform contactless card transactions at point-of-sale (PoS) terminals and QR code payments.
    • Data storage: Only card networks and card-issuing banks will have access to and can store any card data.

    Source: LM