Home / Industry / Banking /  Why is card tokenisation so important? Is it safer for consumers?
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In view of various representations received from industry bodies, the Reserve Bank of India (RBI) has extended the card-on-file (CoF) tokenisation deadline by six months to June 30, 2022.

The changes “are expected to reinforce the safety and security of card data while continuing the convenience in card transactions. 

Card tokenisation enhances cards security for the customer by reducing the surface area of risk," said Ishan Sharma, VP, Business Development at Juspay.

Tokenisation was always the future of card payments, he added.

"Apart from this, there are also benefits such as better success rates due to improved issuer visibility and lifecycle management, as well as, an enhanced user experience for customers. Tokenization was always the future of card payments. We are glad the RBI has given the ecosystem a six-month extension, this will give merchants and partners enough time to migrate all card payment flows to Tokenization," he said.

The earlier deadline for implementation of card tokenisation was December 31, 2021.

“Digitisation is providing innovative financial products and services to customers of banks. It has helped in improving customer service and delivery and has great potential. As digital plays this vital role, it is important that the customer must be served in a secure environment with his privacy protected. Card tokenisation is an important step of the regulator towards ensuring this objective. To implement an instruction, RBI has to set a timeline," Arijit Basu, Chairman, IMC Banking & Finance Committee said.

“With the adoption of digital commerce amongst the masses at large, the safety of payment data against unauthorized usage holds paramount importance. Tokenisation provides an additional layer of security by encrypting the card details and will help enhance consumer confidence in using digital modes of payments. In our view, the enhanced security in digital payments will benefit the entire ecosystem notwithstanding the transient adoption lag,"Rajanish Prabhu, Country Head - Credit Cards & Merchant Acquiring, YES BANK said.

What is tokenisation

Under tokenisation services, a unique alternate code is generated to facilitate transactions through cards. It is the process of substituting a 16 digit customer card number with a non-sensitive equivalent value, referred to as a token. 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.









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