Card Tokenization in India | 01 Feb 2025

Source: BL 

Card tokenization has become a significant technological advancement in India, enhancing security and customer convenience in digital payments. 

• Over 91 crore tokens were issued by December 2024 and has enabled nearly 98% of e-commerce transactions to be processed without actual card data, reducing the risk of data breaches. 
• Tokenization: It substitutes actual card details with a unique code, or "token," which acts as a secure identifier during transactions. 
  • Types: Device tokenization (specific to each device) and Card-on-File tokenization (specific to each merchant). 
  • Security Benefits: Tokens prevent merchants from storing sensitive card details, safeguarding customers' information in case of a security breach. 
  • Future Expansion: Tokenization is expected to grow beyond e-commerce into contactless payments, recurring transactions, and potentially UPI-linked credit card payments. 
  • Cybersecurity Regulations: In October 2022, RBI mandated that merchants and payment processors no longer store customer card data, relying entirely on tokenization. 

Read more: Tokenization of Cards in India