“RBI to Introduce Card-on-File Tokenisation at Bank Level, Enhancing Security and Convenience”

In a bid to fortify the security of online transactions and simplify the payment process for consumers, the Reserve Bank of India (RBI) has unveiled plans to introduce Card-on-File Tokenisation (CoFT) creation at the issuer bank level. RBI Governor Shaktikanta Das made this significant announcement, citing the increasing acceptance and advantages of tokenising card data.

CoFT, or tokenisation, is a process that replaces sensitive card details, such as the 16-digit card number and card verification value (CVV), with unique tokens or codes. These tokens are specific to a particular card and merchant, offering enhanced security and reducing the risk of data breaches.

Governor Das emphasized that this move would substantially enhance convenience for cardholders, enabling them to create tokens that are securely linked to their existing accounts across various e-commerce platforms. This development aims to address growing concerns about the security of online transactions, as instances of data breaches and fraud continue to pose risks to consumers.

Explaining the benefits of tokenisation, Governor Das noted that, until now, consumers often had to store their debit or credit card details on e-commerce websites for ease of future transactions. However, this practice came with inherent security risks, as data breaches on popular websites could expose cardholder information to fraudsters. With tokenisation, the unique token replaces the card’s actual details, ensuring that even if a data breach occurs at the merchant’s end, the fraudsters cannot misuse the card.

The Monetary Policy Committee (MPC), in a separate decision, announced that it would leave the repo rate unchanged at 6.5 percent. The repo rate determines the interest rate at which the central bank lends short-term funds to banks. Additionally, the MPC maintained the Standing Deposit Facility (SDF) and Marginal Standing Facility (MSF) rates at 6.25 percent and 6.75 percent, respectively.

Governor Das acknowledged global economic dynamics, noting that while global headline inflation was easing, it remained above the target in several major economies. He also highlighted the firming up of sovereign bond yields, the appreciation of the US dollar, and corrections in equity markets.

In a positive outlook for India’s economic future, Governor Das asserted that India is poised to become the new growth engine of the world. Despite global challenges, the MPC maintained its forecast for India’s GDP growth in 2023-24 at 6.5 percent.

The RBI’s move to introduce CoFT creation at the issuer bank level is expected to receive widespread support from consumers and industry stakeholders as it promises to significantly enhance the security and convenience of online payments in an increasingly digital world. This initiative aligns with the ongoing efforts to bolster cybersecurity and protect the financial interests of consumers in India.

Sources By Agencies

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