Big 3 credit-card issuers propose digital token
Oct. 4, 2013 – Visa, Mastercard and American Express announced a joint proposal to replace bank card account numbers with a digital token to increase online purchasing safety.
“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,” the joint statement said. “Tokens can be restricted in how they are used with a specific merchant, device, transaction or category of transactions.”
Bloomberg wrote that the token would complement EMV-chip technology that has been adopted in Europe to replace card magnetic strips. The paper cites the Nilson Report saying that a worldwide increase of EMV terminals has caused fraud to migrate online – which is a particular problem for the U.S., which “leads the world in online sales.”
The companies said they plan to apply the standard around the world, and will meet with payment firms and industry trade groups soon to discuss the issue further.
NAFCU Senior Vice President of Government Affairs and General Counsel Carrie Hunt wrote an editorial in CUInsight in September on evolving payment systems, including EMV-chip technology and pre-paid cards. NAFCU’s bimonthly magazine, The Federal Credit Union, also included a feature on EMV-chip technology in September.