The digital economy in India is remarkably diverse, as people from various backgrounds are rapidly embracing mobile payments and online commerce. The sevenfold increase in cyber attacks from 2018 to 2022 underscores the urgent need for technologies like tokenization to secure India’s digital future.
India has crossed a whopping 300 million tokens provisioning milestone since launch in 2023. As tokenization continues to evolve in India, it promises to unlock various business opportunities and digital payment scenarios. Tokenization is not just a technological advance; it is a pivotal catalyst shaping India’s digital economy ambitions, a recent Visa report revealed.
When coupled with emerging technologies such as smart devices, wearables and biometrics, tokenization has the potential to unlock many futuristic use cases that go beyond traditional transactional boundaries, the report highlighted.
Tokenization acts as an anchor in the payment ecosystem, helping various stakeholders achieve their goals. Whether it’s the economic growth targets set by governments or the consumer protection mandates of regulators, tokenization plays a pivotal role.
RBI Executive Director P Vasudevan highlighted how the Reserve Bank has undertaken the massive pan-India awareness campaigns across all media to explain the benefits of tokenization, the process to follow, etc.
“Within the general deadlines, enough space has been given for users to create tokens. I have also seen similar campaigns by the card networks and other intermediaries in the online card transaction processing chain. The top management of the Reserve Bank also spoke about the benefits of tokenization in their speeches and media/public interactions. Overall, the entire approach was well coordinated and executed. I will admit that there were anxious moments when the public vented their anger and discomfort strongly on social media. Some stakeholders were also seen giving audible bytes to the media resulting in friction,” he stated. RBI, with its forward-looking approach, had already introduced guidelines for device tokenization in 2019. However, the challenges posed by the rapid growth of digital payments and digital commerce in the country during the pandemic made it clear that a more robust solution was needed. Card on File Tokenisation, which allows merchants and payment processing intermediaries to adopt tokens to process transactions, has emerged as the answer. This approach was consistent with the central bank’s consistent focus on consumer consent and awareness.
By leveraging tokenization through contactless payment technologies, RBI has ensured that consumers can enjoy the convenience of fast payments without compromising security. While countries across the Asia Pacific have taken strides in adopting new payment standards, RBI’s proactive measures from EMV migration to the strategic adoption of tokenization, have been instrumental in shaping India’s payments landscape.
