Payment Networks Propose Tokenization Standard to Secure Online, Mobile Payments (Oct. 1, 2013)
The time has come to agree on a simpler way to use and store digital payment credentials, a trio of payment networks said today. Visa, MasterCard and American Express are proposing a framework for a new global standard to replace traditional account numbers with a secure digital payment “token” that they say would streamline online and mobile transactions, making the experience more consistent, regardless of device or technology. Such a standard would eliminate the need for consumers to manually enter confidential account data into Websites and apps, while merchants, digital wallet operators and other payment industry intermediaries would no longer need to store such information.
The proposed standard, developed with input from a broad range of industry players, including card issuers and merchants, would be available to all payment networks and other industry participants, according to a joint announcement. The Clearing House, the PCI Security Standards Council and EMVCo will be invited to weigh in on the proposed plan in the coming weeks, they added.
While Discover Financial Services so far isn’t commenting on the proposed standard, observers say the industry as a whole in the past year has been moving rapidly toward creating simpler and more secure processes for executing payments through digital channels. Visa’s V.me and MasterCard’s MasterPass are examples of digital wallets that store payment credentials in the cloud. Other evolving mobile and digital wallets include Isis, which runs on the Discover Network; PayPal’s fast-evolving digital wallet; Google Wallet, which recently announced a major overhaul, and Merchant Customer Exchange (MCX), led by major retailers.
“Tokenization of data is highly developed and establishing a common standard for e-commerce and m-payments would be a step forward for all payment players, including creating a stronger basis for capturing data, which makes this all more valuable,” Eric Grover, a principal with payments consulting firm Intrepid Ventures, tells Paybefore. “This is also a smart strategic move for existing networks to possibly defend against new and disruptive payments innovators that could redefine the landscape one day with their own, different standards,” he notes.