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ALEXANDRIA, Va. — With the exception of actually holding a physical debit or credit card, the numbers appearing on these cards should be replaced in every other situation with payment “tokens,” Melanie Gluck, vice president of MasterCard Worldwide, stressed during a webinar Thursday hosted by industry trade association Conexxus.
During the presentation, entitled “Tokenization and the Changing Payment Environment,” Gluck noted that actual card information should always be replaced with tokens to reduce fraud. Tokens are numbers that are useless if stolen by hackers. When combined with EMV (Europay, MasterCard and Visa) at the point-of-sale (POS), tokenization can make payment transactions much more secure, she said.
"Consumer card account numbers should be pulled out of the ecosystem," Gluck said. "…Tokenization reduces fraud for the entire digital payments ecosystem."
And tokenization is not only about security, but also about improving the customer experience as it can provide many benefits for merchants, consumers and card issuers alike.
In addition to being more secure, tokenization benefits retailers by offering:
- Faster checkout;
- More payment options; and
- More ways to sell.
On the consumer end, Gluck said tokenization offers:
- New ways to pay from every device;
- Better user experience; and
- Added peace of mind due to fewer fraudulent transactions.
Finally for issuers, tokenization provides:
- Opportunity to extend existing card business;
- More secure transactions using EMV-like cryptography; and
- Fewer chargebacks.
MasterCard offers Digital Enablement Service (MDES), which provides end-to-end tokenization and digitization, as well as a suite of related business services. Financial institutions need to enroll in the system and customers must be verified. Once this is completed, tokens are conveyed to the merchant at the POS. This system works for contactless payments (when consumers tap their smartphone for payment) and in-app (payments conducted via a mobile app like Apple Pay).
Any merchant with near field communication (NFC) enabled POS devices can accept MDES, Gluck relayed. She acknowledged, however, that c-store retailers are much more likely to have NFC-enabled devices in-store as opposed to at the forecourt, where the EMV liability shift deadline will not go into effect until Oct. 1, 2017. In 2016, MDES will be available for card-on-file transactions.
Alexandria-based Conexxus addresses technology standards to improve business processes, reduce costs and increase productivity for the convenience and fuel retailing industry.