Card-on-File Tokenisation (CoFT)

News excerpt:

A survey by Visa found that RBI's Card-on-File Tokenisation (CoFT) in India, initiated in 2021, has seen widespread success, enhancing security and transforming digital payments.

About the news:

  • 88% of industry leaders found CoFT enhanced security.
  • 65% believe that it increased trust in digital payments.
  • 94% say it reduced data breach risks.
  • 41% state that it has reduced fraud rates.

About CoFT:

  • It replaces a card’s 16-digit number on the plastic card with a unique alternate number or ‘Token’, which shall be unique for a combination of card, token requestor, and device. 
  • These tokens can be used for online, mobile Point-of-Sale (PoS), or in-app transactions.
  • The Reserve Bank Of India (RBI) 2022 directed payment aggregators, wallets, and online merchants not to store sensitive card-related customer information.
  • Recently, RBI has extended the CoFT to the issuer bank-level, expanding it from merchant applications or websites.

Benefits of CoFT

  • Simplified Payments: Tokenisation facilitates more manageable payments through smart devices employing augmented and virtual reality.
  • Revolutionising Commerce: Issuing digital cards becomes faster, and subscription-based services are simplified, thus improving the overall consumer experience.
  • Frictionless Authentication: Tokenisation, combined with biometric authentication (such as fingerprint or facial recognition), reduces card-related fraud by providing secure and seamless verification.
  • Improved B2B Payments: Tokens enable businesses to issue unlimited virtual cards and set transaction spending limits, thus effectively mitigating risks.

Challenges associated with CoFT:

  • Complex Integration between the systems
  • Operational clarity of regulatory guidelines 
  • Customer Education and Awareness 


So far, over 56 crore tokens have been created in India, and transactions valued at over Rs 5 lakh crore have already occurred.  As India pushes towards a digital economy with an increasing volume of transactions, tokenisation has immense potential to digitise the payment ecosystem further. The RBI’s visionary policies and supportive regulatory framework have been a correct step in the right direction.

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