Card-on-File Tokenization – Issues, Technologies, and Innovations

Card-on-file tokenization has emerged as a critical technology in India’s rapidly digitizing financial ecosystem, particularly following the Reserve Bank of India’s (RBI) mandate prohibiting merchants from storing card details. By replacing actual card credentials with secure, context-specific tokens, tokenization significantly reduces the risk of data breaches and financial fraud, thereby enhancing digital payment security. This study conducts an extensive review of secondary research sources, including RBI circulars, academic literature, and domestic fintech case studies, to examine how tokenization is being implemented across the Indian payments landscape. The findings reveal that while tokenization has greatly enhanced consumer data protection, persistent challenges remain, including regulatory ambiguity, limited interoperability across platforms, and overreliance on centralized token vaults. These advancements could help create a more secure, inclusive, and resilient digital payments infrastructure tailored to India’s unique regulatory and technological environment.