Given the growing popularity and advantages of tokenizing card data, the RBI is also considering introducing Card-on-File Tokenization (CoFT) generation facilities directly at the issuer bank level, according to Governor Shaktikanta Das Das, who made the announcement on Friday.
“Direct CoF token creation facilities at the issuing bank level are now being proposed. This action will make it easier for cardholders to create tokens and link them to their current accounts with different e-commerce applications. Shaktikanta Das stated that instructions in this regard will be given individually.
Card-on-File Tokenization (CoFT) was introduced by RBI in September 2021 and went into effect on October 1, 2022. The Statement on Developmental and Regulatory Policies, released on October 6, stated that “so far, over 56 crore tokens have been created on which transactions with a value of over 5 lakh crore have been undertaken.”
To enable card transactions, tokenization services generate a special substitute code. It involves replacing a 16-digit client card number with an equivalent, non-sensitive value known as a token. In essence, this means that no merchant, payment gateway, or third party that is now used to handle digital transactions will longer have access to a customer’s card information.
Additionally, the PM Vishwakarma Scheme recipients were added, and the Payments Infrastructure Development Fund (PIDF) programme was extended by two years.
“It is now being suggested to prolong the PIDF Scheme for an additional two years, up until December 31, 2025. Additionally, it is suggested that all centres participating in the PIDF Scheme include beneficiaries of the PM Vishwakarma Scheme. The Reserve Bank’s initiatives to promote digital transactions at the grassroots level will gain momentum as a result of this move to broaden the targeted beneficiaries under the PIDF scheme, according to Governor Shaktikanta Das.
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“It is a positive step that the Reserve Bank of India has announced it will extend the Payments Infrastructure Development Fund (PIDF) scheme’s lifespan by an additional two years. It demonstrates the regulator’s dedication and attention on broadening the use and acceptance of digital payments. As a major player in the payments industry, we look forward to doing our part to hasten the adoption of digital payment acceptance methods in the targeted regions, said Ramesh Narasimhan, CEO of Worldline India.
