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RBI announces a better card tokenisation method for consumers

The new development will essentially allow users to create tokens for their card directly from their bank’s website, which can in turn allow consumers more control and easier management of tokens.

The Reserve Bank of India (RBI) on October 6 announced that debit and credit card tokenisation can soon be done directly at the issuing bank website or app in addition to the merchant portal, offering consumers a better and more secure way to create and manage their card tokens. The central bank said that it will issue more detailed instructions on this shortly.

What is card tokenisation? Card-on-file Tokenisation (CoFT) was a measure introduced by RBI that went into effect in October 2022. It basically allows merchants (such as e-commerce platforms) and payment aggregators to store tokens of the card details and process payments based on these tokens rather than actual card details. Tokens are unique numbers based on a combination of card details, merchant, and device of the user. Card tokenisation was introduced because RBI prohibited merchants from storing the actual card details of their users. Card tokenisation currently can only be done at the merchant site or app when making payments—for example, on the e-commerce portal where a user is making transactions.

Why is the RBI introducing new channels for tokenisation and how is it better: The new development will essentially allow users to create tokens for the card directly from their bank’s website or app and then attach it to any merchant site. For example, I can create a token for my credit card from my HDFC Bank app and attach it to my Amazon account. This will allow consumers more control as tokens can be created and managed from one place, such as the consumers’ bank portal. The new channel is also more secure as card details don’t have to be shared with third-party merchants for the creation of tokens.

“The expectation is that once this is implemented, you would be able to create and manage your card tokens for e-commerce sites directly from your bank account, pretty much like setting your credit and spending limits over net banking or your banking app.” — Adhil Shetty, CEO, BankBazaar.com told MoneyControl.com

What’s the status of card tokenisation: When the card tokenisation policy went into effect last year, the industry was ill-prepared due to the complexities involved in the process and the lack of time and transactions were set to fail. But over the last year, there seems to have been some improvement in the industry readiness. “So far, over 56 crore tokens have been created on which transactions with a value of over ₹5 lakh crore have been undertaken. Tokenisation has improved transaction security and transaction approval rate,” RBI stated.


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