Transcranial alternating current stimulation (tACS) applies exogenous oscillatory electric field potentials to entrain neural rhythms and is used to investigate brain-function relationships and its potential to enhance perceptual and cognitive performance. However, due to current spread tACS can cause cutaneous activation of the retina and phosphenes. Several lines of evidence suggest that retinal phosphenes are capable of inducing neural entrainment, making the contributions of central and peripheral stimulation to the effects in the brain difficult to disentangle. In this literature review, the importance of this issue is further illustrated by the fact that photic stimulation can have a direct impact on perceptual and cognitive performance. This leaves open the possibility that peripheral photic stimulation can at least in part explain the central effects that are attributed to tACS. The extent to which phosphene perception contributes to the effects of exogenous oscillatory electric fields in the brain and influence perception and cognitive performance needs to be examined to understand the working mechanisms of tACS in neurophysiology and behaviour.