card tokenization

The way India is adopting the digitization of the currency is quite considerable. Every day, we are getting to see new ways of using our bank accounts and cards through multiple applications. Recently, the users also got the ability to link their credit cards with UPI. Recently, the Reserve Bank of India (RBI) has also enforced card tokenization in India.

All of us have been seeing the glimpse of the same as multiple websites and apps asking us to secure our cards as per new RBI guidelines. To explain the same to you in a simple way, here we have explained everything around the concept of card tokenization.

Card tokenization: What it is and how does it work?

Whenever you choose to enter your card details for purchasing something online in an app or website, then the details are saved on the servers of that particular platform. To enhance security of your card, RBI introduced tokenized system where an unique token is created and captured by the merchant. In simple terms we can that it is encrypted code that directs the server to the card. In this way, none of the merchants will have to get the credentials of the card and it will stay protected from data breaches.

In addition, the responsibility of protecting your card details will no longer be on the applications, merchants, payment processors like RazorPay or banks. Card tokenization is a new way of protecting domestic card transactions by the use of random strings of tokens in place of private card details.

As soon as you go for tokenizing a card, the particular card network like MasterCard, or Visa, allot token by the consent of the bank and share the same with the merchant. One thing which you have to keep in mind is that a single debit and credit card will have different tokens in different payment applications like Paytm, Amazon Pay, PhonePe, etc. This will leave minimal to no scope of vulnerability and will keep the hackers and scammers at bay too.

Why it is necessary for India?

The necessity of card tokenization in India is increasing day by day. In the past few months, we have seen data breaches in the most popular applications and websites from where the details of the users have been stolen and sold online.

The tokenization of the card will also ease the burden of applications and intermediaries for keeping a check on any kind of breach. Moreover, the customers will also get the liberty to store their card details on any platform without even worrying about the details being leaked somewhere.

Card tokenization Policy by RBI: Upsides and downsides

Now, it is a well-known fact that everything has its pros and cons and the case is not different in card tokenization. The very first advantage is that the merchant will not be able to access your card details now. The customers will also be assured that no card fraud will happen after the tokenization policy comes into effect. Talking about the disadvantages, until now, there have been no flaws encountered. However, we will get to know more about the disadvantages once the policy comes into effect.

What is going to change for consumers?

The best part here is that as a customer, one is not supposed to go through and long process. The consumers just need to secure their cards in multiple applications as per the guidelines of RBI and that’s it. As soon as the card is saved as per the new guidelines, the complete card details from a merchant’s server will be removed and only the token will be saved along with the name of the customer and the last four digits of the card for the purpose of identification.

Expected release date of card tokenization policy in India

RBI is prepping up to roll out card tokenization completely in India since 2019. However, after multiple extensions in the date, the card rollout is supposed to happen in October 2022 finally. Still, there are chances that RBI will extend the date as it has already happened multiple times in the past. So all the customers are supposed to save their card details as per RBI guidelines before the deadline, if they fail to do so, then the details will be automatically deleted from the merchants’ server.


Here we tried out best to make you familiar with the concepts of card tokenization and how RBI is planning to implement it. The basic goal behind the introduction of card tokenization is to keep the user’s data safe from scammers and hackers and release pressure from the merchants and other intermediaries. We will surely update the piece if there is some new addition to the whole concept so keep a check on it too.


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