MasterCard, Visa, and American Express have teamed up to create a new digital payment technology. The companies introduced a proposed framework for a new global standard to enhance the security of digital payments and simplify the purchasing experience when shopping on a mobile phone, tablet, personal computer or other smart device.
The proposed technology will allow the traditional account number to be replaced with a digital payment “token” for online and mobile transactions. With a token, consumers will no longer be required to enter an actual account number when shopping online or on a smart device. Tokens provide an additional layer of security and eliminate the need for merchants, digital wallet operators or others to store account numbers.
To ensure consistency across the globe, the proposed standard used to generate tokens would be based on existing industry standards and would be available to all payment networks and other payment participants. Key elements of the proposed standard include:
• New data fields to provide richer information about the transaction, which can help improve fraud detection and expedite the approval process
• Consistent methods to identify and verify a consumer before replacing the traditional card account number with a token
• A common standard designed to simplify the process for merchants for contactless, online or other transactions
Once a standard is agreed to and implemented, issuers, merchants or digital wallet providers would be able to request a token so that when an account holder initiates an online or mobile transaction, the token – and not the traditional card account number – would be used to process, authorize, clear and settle the transaction in the same way traditional card payments are processed today. Tokens can be restricted in how they are used with a specific merchant, device, transaction, or category of transactions.
If a token were generated for a one-time use, specific dollar amount, specified purchase at the designated merchant, under what circumstances would that token be of any use to anyone else?
I don’t know about you but this certainly sounds like an important breakthrough in significantly reducing card fraud.
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