What is Card-on-File Tokenisation?

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What is Card-on-File Tokenisation? Blog Image


Recently, the Reserve Bank of India (RBI) proposed to introduce Card-on-File Tokenisation (CoFT).

About Card-on-File Tokenisation

  • Tokenisation refers to replacement of actual credit and debit card details with an alternate code called the “token”, which will be unique for a combination of card, token requestor and device.
  • This shall be unique for a combination of card, token requestor (i.e. the entity which accepts request from the customer for tokenisation of a card and passes it on to the card network to issue a corresponding token) and the merchant (token requestor and merchant may or may not be the same entity).
  • Advantage: A tokenised card transaction is considered safer as the actual card details are not shared with the merchant during transaction processing.
  • Customers who do not have the tokenisation facility will have to key in their name, 16-digit card number, expiry date and CVV each time they order something online.

What is a Card-on-File transaction?

  • It is a transaction where cardholders authorizes merchants to store their payment information securely and bill cardholders’ stored accounts for future purchases.

Q1: What is a credit card?

A credit card is a financial tool that allows consumers to make purchases on credit, effectively borrowing money from a financial institution (usually a bank or credit card issuer) to be paid back at a later date.

Source: RBI to introduce new channels for Card-on-File Tokenisation