More payment tokens are coming to e-commerce.
Visa Inc. says it will enable the use of tokens—mathematical code that transforms sensitive consumer information such as 16-digit credit card numbers into encrypted codes that would be useless to criminals—for the more than 110 merchants globally that use the payment card network’s Visa Checkout online payment service. The expansion of the technology will take place in April.
“In 2015, Visa expects some of the largest e-commerce merchants to deploy Visa Token Service, using tokens to process consumer e-commerce purchases rather than actual payment account information,” the payment card network says.
Launched in 2014, Visa Checkout enables consumers who enroll to have their Visa debit or credit card data stored by the service. Registered shoppers then need only provide user names and passwords to make online payments with participating retailers. The shopper remains on the e-commerce site while signing in. Retailers have objected to other authentication services that take a shopper off the site to fill in identifying information. One main point of the service, Visa has said, is to keep consumers from abandoning transactions when faced with multiple screens for payment.
Retailers taking part in Visa Checkout include such Internet Retailer Top 500 stalwarts as Staples Inc. (No. 3), Gap Inc. (No. 19), Neiman Marcus (No. 41), and The Gymboree Corp. (No. 345), according to Visa.
Visa also says that later this year, financial institutions in Asia Pacific, Latin America and the U.S. will deploy Visa Token Service in support of mobile payment applications and services.
A spokeswoman for the payment card network says that while consumers will need to use Visa Checkout for the anti-fraud protection offered by tokens, retailers who participate will not need to replace payment processing software or equipment. “The merchant does need to accept Visa Checkout on their web and/or mobile site, but this does not require new software or a large amount of coding on the merchant’s side,” she says. “They simply receive the information Visa Checkout sends back and process the transaction using the connections to the payment system they already have. No new equipment is required.”
Retailers that use tokens will not to have store primary account numbers from payment cards, which is a positive step, says Rich Stuppy, chief operating officer of online fraud prevention firm Kount Inc. But, he adds, “the most prolific source of compromised credit cards is point-of-sale malware and memory scrapers. This does nothing to address that.”
The expansion of token technology to Visa Checkout comes after last year’s launch of Apple Pay, the mobile payment system by Apple Inc. (No. 2 in the Top 500). that also includes token technology. Apple Pay is incorporated into the Apple Passbook mobile wallet, backed by American Express, Visa and MasterCard. Apple Pay uses Near Field Communication technology, the iPhone’s Touch ID biometric fingerprint scanner and encryption to enable in-store payments by holding the iPhone close to a payment terminal. Apple Pay also allows retailers to use its fingerprint scanner to let consumers make purchases inside applications on the iPhone.
Apple Pay does not require credit or debit card data to be stored on a consumer’s phone. Rather, a 16-digit device identification number is combined with a one-time payment number with a dynamic security code for each payment. The consumer’s identity is verified using the Touch ID biometric fingerprint scanner. The result, hopes Apple, is a secure way to pay with a smartphone in stores.