Reduced risk of data breach the main benefit of tokenisation: Visa

Enhanced security and a reduced risk of data breach have emerged as top benefits of Card on File (CoF) tokenisation for customers and the industry, respectively, in the backdrop of India issuing over 560 million tokens over the past year, according to a Visa report.

Card payments major Visa said the company had issued 300 million tokens out of the 560 million in the country since October 2022.

'This is a substantial portion of its over 7.5 billion tokens issued globally, leading to card authorisation rates rising by 4.5 per cent since the introduction of tokenisation,' Visa’s report titled ‘Enabling the Digital Shift: Tokenisation in India’s Economic Landscape’ said.

Increased trust in digital payments, improved payments experience, reduced fraud rates, and simplified compliance were the top benefits of CoF tokenisation, according to the aforementioned report which surveyed industry executives across card issuers, payment acquirers and processors, and merchants.

The Reserve Bank of India (RBI) defines tokenisation as the replacement of actual card details with an alternate code called the ‘token’, which is a unique combination of card, token requestor, and a device.

A tokenised card transaction is safe as the card details are not shared with anyone, including the merchant, during the processing of a transaction.

'We appreciate the efforts of all ecosystem players, including Visa, in championing tokenisation and highlighting its benefits. With a substantial 560 million tokens already in circulation and a fast-paced growth rate, we foresee tokenisation becoming a pivotal force in the evolution of digital payments,' said Vasudevan P, Executive Director, RBI.

Meanwhile, while adopting tokenisation, organisations encountered primary challenges such as customer education and awareness, operational clarity of regulatory guidelines, and complex integration, the report added.