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Card providers plan 'token' scheme for digital transactions

Three of the world's leading card payment providers are working together to produce a framework that they say will simplify the purchasing process when shopping on a mobile phone, tablet, personal computer or other smart device.

MasterCard, Visa and American Express are collaborating on the initiative, which would see traditional account numbers replaced with a digital payment "token" for online and mobile transactions. These tokens, the companies said, can provide an additional layer of security and eliminate the need for merchants, digital wallet operators or others to store account numbers.

For reasons of consistency, the proposed standard used to generate tokens would be based on existing industry standards and would be available across all payment networks.

Over the coming weeks, the card companies will present the framework proposal to other partners and independent industry bodies, including The Clearing House, PCI Security Standards Council and EMVCo, as they look for the initiative to gain traction.

Jim McCarthy, global head of innovation and strategic partnerships at Visa, said: "As more consumers make purchases with mobile phones, tablets and PCs, we are committed to showing industry leadership in the development of new standards that offer the same interoperability, reliability and security as traditional card payments."

But how would the token system work? The card providers say that once a standard is agreed to and implemented, the whole payments eco-system, including issuers, merchants and digital wallet providers, would have the option to request a token. When an account holder initiates a digital transaction, it will no longer be the traditional card account number that is used to process, authorise, clear and settle the transaction.

The scheme would, of course, need broad acceptance and must ensure mobile application developers and others are able to easily and securely develop innovative payment products.

Chief emerging payments officer at MasterCard Ed McLaughlin commented: "This continued transition from plastic cards to digital is all about providing consumers with the ability to easily and safely make a purchase.

"They would no longer need to store their actual card account number when shopping online or with a smart device; the token would serve as that stand-in."

Although competitors, card companies do work together on matters of security and standards, and the head of global network business at American Express, Mike Matan, argued that collaborating on this matter will allow the card providers to "provide enhanced security, interoperability and consistency for all participants within the digital payments ecosystem".

"In addition, we will be able to drive the rapid adoption and expansion of digital payments, delivering innovative new products and services that will allow consumers to realise the full potential of digital commerce in today's world," he explained.

A UK Cards Association spokesperson told Essential Retail: "We welcome any initiative that removes reliance of static data and support the schemes in making way for more secure payments in new channels such as eCommerce and mCommerce.

"Anything that will help streamline the payment process will help reduce the risk of consumers dropping out of transactions because the existing process is onerous and time consuming. We await the detail from the schemes but are optimistic that this is a positive step forward."


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