23 Jul Payment industry’s take on tokenization
Seven Industry Players Offer Their Take On Tokens..
The use of tokens - the concept of a surrogate being used to replace something of value - is nothing new in payments and financial services. But the consumer-driven demand for smart devices, coupled with rapidly changing technologies, has the industry buzzing about what’s next in tokenization - especially when network tokenization , at least for now, seems a bit at cross purposes with tokenization on the acquiring side.
Hardly has there been a topic that has garnered as much attention across the payments ecosystem as tokenization has recently. It’s not a new concept, since tokens have been used to encrypt cardholder information post-authorization for many years. But it’s one that has cast a new light on the role of the various stakeholders across the payments ecosystem with the introduction of network tokenization that replace that replace payments account numbers when payments transactions are initiated.
These tokens are presented to merchants for payments, and enabled for payment by a new player - a Token Services Provider - that authorizes the payment. Payments tokens, as some refor to them, are stored in vaults maintained by the TSP - which could be an independent third party or integrated with the card networks.
Seven senior executives from across the payments and commerce landscape, each representing a difference facet of the industry, came together on the evolution of tokes and tokenization. The focus was how this developing technology can be used to facilitate a demand for payments that are both secure and convenient.
Tokens Before Tokens Were Cool
Starting with the perspective that the payments industry was all about tokens before tokens became cool, thanks to the introduction of Apple Pay.
“Apple did not invent tokenization, it has been there for a long time. What is now happening is, that its use is now standardized for all payment cards across the world. The stumbling block earlier was making sure a card that is tokenized by one player in the U.S. works in the U.K., and that is what network tokenization brought to us,” said Hitesh Anand, VP of Commerce Enablement and Mobile at Verifone.
Tokens - Everywhere You Want Them To Be?
True enough, everyone agreed. But we have the “battle of the tokens” – tokens on the acquiring side that don’t have anything to do with tokens on the payments and issuing side. Tokens, some believe, need to be ubiquitous – enabling payments to be made anywhere and everywhere – to deliver the promise of payments safety and security. Yet with ubiquity comes many questions and challenges.
“Only when we can deliver these tokens ubiquitously, can we get to a point where we can start changing consumers’ behavior from what they normally use for payments which is swiping or dipping a card, to utilizing their mobile devices to use tokenization for payments. Without that behavior change, it’s going to be very hard for tokenization to take off,” added Will Graylin, CEO of LoopPay and Co-GM of Samsung Pay.
Read here for the complete report of payments Industry’s take on tokenization.
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