India’s Shift to Card Tokenisation Infrastructure
In 2025, card tokenisation is no longer optional — it is the default. Every major bank, fintech, and payment gateway in India now routes transactions through token vaults aligned with the Rbi Card Tokenisation Policy. The Reserve Bank of India first mandated this move to curb card-data leakage from merchant databases, replacing 16-digit PANs with encrypted tokens stored securely by authorised token service providers (TSPs).
As the system scaled from pilots to hundreds of millions of cards, India’s payment landscape entered a new security paradigm — safer on the surface, but more complex underneath. Each token acts as a pseudonym for the original card number, reducing exposure in breaches while increasing dependency on API governance and TSP infrastructure.
Insight: NPCI estimates that by mid-2025 over 450 million cards in India will operate on token rails, cutting merchant card storage by nearly 90 %.For fintech issuers and payment aggregators, tokenisation is both a compliance obligation and a competitive edge in user trust metrics.
How Tokenisation Reduces — and Sometimes Reveals — Fraud
At its core, tokenisation removes card data from the merchant environment. When a user makes a payment, the merchant receives a unique token — not the card number — for that device and merchant combo. Even if breached, the token has no value elsewhere thanks to PCI DSS-aligned controls set within the Payment Data Security Framework.
This reduces classic data leak and card skimming fraud, but creates new blind spots for pattern detection. Fraud analytics engines that once tracked PAN numbers must now map tokens across ecosystems without violating privacy rules. Banks and fintechs are learning to detect multi-token anomalies — the same user trying multiple tokenised cards from different devices.
Tip: Fintechs linking fraud-risk engines to token vault metadata can reduce false positives by up to 35 %, improving real-time decisioning accuracy.The lesson: tokenisation reduces breach impact but demands smarter behavioural analytics and shared intelligence between issuers, TSPs and acquirers.
Fraud Tactics Evolving in the Token Era
Fraudsters adapt fast. As merchant breaches shrink, social engineering and account-takeover attacks rise. Threat actors now target OTP interception, device cloning and fake app overlays to bypass token authentication. Some deploy synthetic IDs to request tokens on compromised devices — a trend flagged in industry data compiled through Fintech Fraud Prevention Tools.
Key fraud patterns emerging in 2025 include:
- Token-Proliferation Exploitation: Issuing multiple tokens per card across apps to test weak KYC flows.
- Session Hijack Loops: Intercepting payment tokens through malware-infected browsers or SIM swap tactics.
- Merchant Impersonation: Creating fake checkout interfaces that request re-tokenisation from users.
- Cross-Border Routing: Using VPNs to trigger international token requests outside RBI-approved jurisdictions.
In response, banks and fintechs are deploying real-time cyber risk models trained on anomaly datasets sourced from Cyber Risk Analytics systems. These models learn how legitimate tokens behave — frequency, velocity, device signature — and flag outliers instantly.
Building Secure Scale for 2025 and Beyond
Tokenisation at scale will succeed only if security and user experience evolve together. In the coming year, RBI is expected to mandate cross-issuer token interoperability and periodic token renewal to curb stale credentials. Meanwhile, fintechs are focusing on three pillars of sustainable security:
- 1. Unified Fraud Monitoring: Shared token intel pools across issuers to trace multi-app attack vectors.
- 2. Device-Level Trust Scoring: Building risk profiles for mobile devices before token issuance.
- 3. Consumer Awareness Design: Simple dashboards showing where a user’s card is tokenised and how to revoke access.
By 2026, tokenisation will move beyond compliance — becoming a core competitive metric for payment apps. Those who invest early in predictive risk controls and transparent user education will set the benchmark for digital trust in India’s next-gen payments ecosystem.
As one CISO remarked at a recent conference, “Tokenisation didn’t end fraud — it changed its address.”
Frequently Asked Questions
1. What is card tokenisation?
It replaces a card’s 16-digit number with a unique token for each merchant or device, protecting user data during digital transactions.
2. Why did the RBI mandate tokenisation in India?
To prevent merchant-side data breaches and ensure that card credentials are never stored on external servers.
3. Does tokenisation eliminate fraud completely?
No, it minimises card data risk but shifts fraud to social engineering and account takeover attempts.
4. How can fintechs strengthen token security?
By integrating behavioural analytics and device trust systems while following RBI and PCI DSS compliance frameworks.
5. What’s next for tokenisation in India?
Cross-issuer interoperability, stronger AI-based fraud monitoring, and user-controlled token dashboards are the next phase of innovation.