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Expanding Tokenization framework: Interview with Ravi Datla, VP Digital Products, Mastercard

By Leandra Monteiro

January 24, 2022

  • Bank Security
  • Card-On-File Tokenization
  • Digital Transformation

IBS Intelligence had a chat with Ravi Datla, Vice President, Digital Products at Mastercard to discuss the RBI’s recent decision to expand the tokenization framework.


RBI’s decision to expand the tokenization framework to card-on-file tokenization and the recent extension of timeline is a move that will bar merchants from storing actual card data. Can you shed some light on how this will be a step towards a safer and secure payments ecosystem?

Growing digital adoption and a lack of cyber security awareness has caused an unprecedented spike in cases of data theft all around the globe. As fraudsters are ramping up their activities in the financial services industry, the new card-on-file tokenization framework certainly reflects RBI’s intent to safeguard the country’s thriving digital payments ecosystem from being vulnerable to global ransomware and financial fraudsters. We believe that by replacing sensitive payment credentials with digital tokens, a superior e-commerce experience is created, which provides increased security, approval rates, and a frictionless consumer experience.

What makes the new regulation a game-changer is that it prohibits entities in the transaction value chain from storing consumers’ card details and letting the Issuer banks and card networks save the data. Thus, only the entities with utmost liability to safeguard the cardholder data possess and safeguard. The decision will add a safety layer to the digitized payment ecosystem by replacing the card number with a unique alternate number called “token.”

The extension of timeline till 1st of July 2022 will help the industry in migrating the existing saved cards in the ecosystem to the tokenization framework and will also ensure minimal disruption to the end card holder

Can you highlight some of the initiatives undertaken by Mastercard to boost card-on-file tokenization?

Globally, Mastercard is an early adopter of card-on-file tokenization and continuously focuses on introducing technology that brings simplicity and safety to cardholders, every time they pay. Mastercard has also created MDES for Merchants (referred to as M4M) to combat these risks by way of tokenization

In India, Mastercard has significant progress in enabling the ecosystem players including roll out the services to card holders. All major Issuer banks contributing to 91% of online payments spend are enabled for CoF tokenization.

Merchants have the option to either integrate directly with Mastercard or engage with on-behalf token requesters to roll-out tokenization services to end users. Over 15 payment aggregators and service providers are certified as token requestors and are onboarding the boarder merchant ecosystem

All major Payment Aggregators, Payment Gateways and Acquirers are enabled to process transactions using tokens. Ultimately roll-out of Mastercard MDES services enables a safer payment ecosystem, inspiring trust from consumers and increasing transaction volume across the digital channels to return greater revenue to merchants.


What are the major benefits from this move, beyond just security of payments?

  • Foster consumer trust: Building trust and loyalty with customers begins with keeping their payment and other personal data safe. Demonstrating a strong commitment to the security of customer data through tokenization will be appreciated by consumers
  • Drive payment innovations: Looking ahead, the use of a range of payment technologies is trending upwards as people’s comfort with and understanding of them increases – while the use of cash steadily decreases. In fact, in the coming year, the survey conducted by Mastercard states that 69% consumers in APAC plan to use cash less frequently. It is evident that the adoption of new payment technologies is rising, and consumer appetite for new, fast, and flexible digital experiences continues to grow
  • Reduce data breach risk:  Hackers target insecure systems that contain intelligence and sell the stolen data or use it themselves to make fraudulent purchases. But tokenization will provide an additional payer of security which reduces friction and improves the shopping experience.

Thus, this move will not only redefine the current payment ecosystem by enabling a safe experience for the consumer but will also aid confidence of millions of mobile-first users all over the country in migrating towards a cashless society.

Lastly, we would like to know Mastercard’s view on the importance of this decision in the post covid world?

Mastercard welcomes the Reserve Bank of India’s decision to permit card-on-file tokenization services as it aligns with our commitment to expanding the safer digital payment infrastructure across micro, small, and medium businesses in the country.

There has been a significant change in consumer behavior, especially after the pandemic, with increased spending in e-commerce showing a growth of 73% in Tier I cities and around 400% in Tier II & III cities. As online shopping and digital payments become essential in our day-to-day lives, we believe that the new tokenization framework will help safeguard card-based digital payments while ensuring a convenient way to pay for millions of debit and credit card users in the country.

It will not be wrong to say that the card on file tokenization solution (‘COF Token’) for online transactions will be a successful digital transformation push for India. To ensure that cardholders are adequately informed about the upcoming changes, we are constantly working with our partner banks, merchants, payment aggregators, and other stakeholders to ensure the seamless rollout of card-on-file tokenization services.

ALSO READ: Global Payments Vendors and Landscape Report Q4 2021

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