Context
The Reserve Bank of India extended the card-on-file (CoF) tokenisation deadline by 6 months to to June 30, 2022. The earlier deadline was December 31, 2021.
What is tokenisation?
- Tokenisation is the process by which the original card number or Primary Account Number is replaced with a surrogate value called a ‘token’.
Card-on-File Tokenisation
- In this process, tokens are created for customer cards to secure them from online frauds.
- These tokens are managed between the token requestor and the network, thereby allowing customers to store their card details in a secure and compliant fashion.
- The relationship between token and card-related data is saved in a vault owned by the card networks.
- As a result, customer card details will be safer than ever before.
- The apex body has recommended that businesses, payment aggregators, payment gateways and acquiring banks in the payment ecosystem – particularly payment service providers – use and store ‘tokens’ instead of card information through tokenisation.
Reason behind the move
- Operational challenges: There are operational challenges that can hinder the transition to the token-based payments ecosystem.
- Lack of ecosystem readiness: Banks at present are lax on preparedness.
