The Reserve Bank of India (RBI) has recently proposed unveiling token creation capabilities directly at the issuer bank level.
This would enable Card-on-File (CoF) token creation at the issuer bank level, which is expected to enhance the convenience for cardholders in generating and connecting tokens to their accounts on e-commerce platforms.
In other words, this new move would allow users to create tokens for their debit or credit cards directly from their bank’s website, thus ensuring better control and easier management of tokens.
The RBI introduced card tokenisation, or CoF, which came into effect in October 2022. It allows merchants, including e-commerce platforms and payment aggregators, to store tokens of the card details and process payments as per these tokens instead of actual card details.
Tokens are unique numbers based on a combination of card details, merchant, and device of the card-holder. Card tokenisation was introduced as the RBI restricted merchants from storing the actual card details of their users.
Currently, card tokenisation can only be done at the merchant site or app at the time of making payments, for instance, on the e-commerce portal where a user is making online transactions.
With this new development, it will be possible for users to create tokens for the card directly from their bank’s website or app and then attach it to any merchant site.
As a result, consumers will have more control as tokens can be created and managed from one place, such as the bank portal of consumers. Besides, the new channel is more secure as card details do not have to be shared with third-party merchants when it comes to the creation of tokens.
In 2022, when the card tokenisation policy came into effect, the industry was not adequately prepared, considering the complexities involved in the whole process; also, due to the lack of time, there was a high possibility that transactions were set to fail.
However, in the past year, there seems to have been a bit of improvement in terms of industry readiness.
Rajiv is an independent editorial consultant for the last decade. Prior to this, he worked as a full-time journalist associated with various prominent print media houses. In his spare time, he loves to paint on canvas.
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