Central Idea

The Reserve Bank of India (RBI) has embarked on a mission to revolutionize digital payments in the country by proposing the introduction of Card-on-File Tokenisation (CoFT).
This move, aimed at enhancing convenience for cardholders, is set to redefine the way Indians engage in online transactions.

Card-on-File Tokenisation (CoFT)

Card-on-file tokenisation involves replacing actual credit and debit card details with an alternative code known as a “token.”
This token is unique for a specific combination of card, token requestor, and device.
Each token is distinct and tailored to the combination of the card, token requestor (the entity facilitating tokenisation), and the merchant (which may or may not be the same as the token requestor).
The primary advantage of Card-on-File Tokenisation is enhanced security.
During a tokenised card transaction, the actual card details are not disclosed to the merchant.
This shields sensitive information from potential security breaches during transaction processing.
Customers who have not enabled tokenisation will need to manually input their name, 16-digit card number, expiry date, and CVV (Card Verification Value) each time they make an online purchase.

A Card-on-File transaction occurs when cardholders authorize merchants to securely store their payment information.
This stored data is then used to bill the cardholders’ accounts for future purchases.
It simplifies the checkout process for consumers, offering convenience and efficiency.