What: Visa, MasterCard and American Express proposed using “digital tokens” worldwide, instead of account numbers for processing purchases made online and with mobile devices.
Why is it important: The use of tokens would help to reduce fraud by providing uniformity. Tokens would also complement EMV-chip technology, which improves security against fraud as it authenticates credit and debit card transactions. Cardholders security would be enhanced with “digital tokens” because its use would be limited for specific environments.
Visa, MasterCard and American Express have proposed a new global standard to enhance the security of digital payments and simplify the purchasing experience when shopping on a mobile phone, tablet or personal computer. This standard involves the use of “digital tokens” instead of account numbers for processing purchases made online and with mobile devices.
With a token, consumers will no longer be required to enter an actual account number when shopping online or on a smart device, as tokens would be the digital equivalent of magnetic stripes on the back of plastic bank cards that contain customer information. Tokens will 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. Once a standard is agreed to and implemented, issuers, merchants or digital wallet providers would be able to request a token, and it will be possible to restrict how tokens are used with a specific merchant, device, transaction or category of transactions.
Over the next weeks, this global framework will be presented to stakeholders, partners and independent industry bodies so as to align and further advance the standard.