Tokenization

Why in the News?

Recently, the Reserve Bank of India has introduced card-on-file (CoF) tokenisation norms which aim at improving the safety and security of card transactions.

Key Points:

About

Card tokenization 

• • Card tokenization refers to the replacement of actual card details of customers stored by businesses with an alternate code or token.
  • Tokenisation can be performed only by the authorised card network and the list of authorised entities is available on the RBI website.
  • The customer need not pay any charges for availing of this service.
  • The customer’s consent and OTP-based authentication are required for creating a token.
    • Then, a token is used to perform card transactions in contactless mode at Point Of Sale (POS) terminals, Quick Response (QR) code payments, etc.

• Devices Supporting Tokenisation:

• • Mobile Phones, Tablets, Laptops, Desktops, Wearables (wrist watches, bands, etc.), Internet of Things (IoT) devices, etc.

Utility:

• Enhanced Security: A tokenised card transaction is considered safer as the actual card details are not shared with the merchant during the processing of the transaction.
• Secured Information: It will cut the chances of card information leakage.
• Easy card management: With tokenization, one can also keep track of all your cards and the merchants they have been tokenized with.