RBI directs banks to roll out Card-on-File token facility for customers

Mumbai, Dec 21: The RBI has issued a circular to all banks for introducing the Card-on-File (CoF) token facility at the level of banks and other institutions to provide convenience for cardholders to get tokens created and linked to their existing accounts with various e-commerce applications.

Until now CoF token could only be created through merchant’s application or webpage. With the RBI issuing the circular to banks on Wednesday, the CoF token creation facilities are being made available directly at the issuer bank level.

"It has been decided to enable Card-on-File Tokenisation (CoFT) directly through card-issuing banks/institutions also. This will provide cardholders with an additional choice to tokenise their cards for multiple merchant sites through a single process," the RBI said.

The circular has been issued to "all payment system providers and payment system participants."

RBI introduced Card-on-File Tokenisation (CoFT) in September 2021 and began implementation from October 1, 2022.

So far, over 56 crore tokens have been created on which transactions with value of over Rs 5 lakh crore have been undertaken.

Tokenisation has improved transaction security and transaction approval rate, according to the central bank.