The tokenization agreement signed yesterday by Visa and Mastercard will help to address the “lack of comprehensive tokenization across brands”, a key merchant barrier to adopting the technology, Visa’s VP of digital products Vish Shastry has told NFC World.
The payments giants’ deal will allow each network’s respective online and mobile wallet services to leverage the token solutions of the other network.
Mastercard will be able to request tokenized Visa credentials from Visa for provisioning into Masterpass, while Visa will be able to request tokenized Mastercard payment credentials from Mastercard for provisioning into Visa Checkout.
While the deal is not expected to have “any short-term impacts on tokenization for mobile payments at this stage”, according to HCE and tokenization provider Antelop Solutions, Mr Shastry says the agreement with Mastercard aims to help them “deliver products that simplify and secure the payment experience”.
“While we have offered Visa Checkout merchants the ability to use tokenization, until now we have only had the opportunity to tokenize Visa cards, and have faced similar constraints with other Visa-built solutions,” he says.
“For participating Visa issuers, Visa cards stored in solutions such as Masterpass will be eligible for tokenization through the Visa Token Service. This further enhances the digital payments category by replacing sensitive PAN data with tokens across a broader range of products and use cases such as Visa Checkout.
“Tokenization is a key enabler to more secure and more convenient payments for mobile and ecommerce. This agreement will ensure that each network’s wallet solutions can remain open with the extra security of using tokens in place of real card numbers.”
Mastercard’s EVP of digital payment products, James Anderson, says the deal will “accelerate the adoption of tokens” across both digital payment platforms and “will ensure that each network’s wallet solutions can continue to stay open — and can add the extra security of using tokens in place of real card numbers”.
“Masterpass uniquely empowers issuers to deliver a customised, branded payment solution,” Anderson told NFC World. “Now, Mastercard can assist them with tokenizing both their Visa and Mastercard card portfolios for provisioning into their Masterpass-supported wallets. As such, more of their customer base benefits from the added security of tokenized Masterpass payments.”
Insight: Rob Macmillan, Proxama
Rob Macmillan from digital payment solutions provider Proxama says Visa and Mastercard’s deal will “enable all flavours of mobile wallets to exist”.
“Tokenization is all about providing a more secure platform to enable commerce, and Visa and Mastercard want to ensure they are in the centre of delivering it,” he told NFC World.
“Visa and Mastercard want anything to be able to perform a payment and tokenization is a key security solution, therefore they want to make it easy to adopt and hard for competing technologies to enter.
“Making it easier to adopt tokenization means making it easier to move commerce to cards. It should make it easier for any user or potential user of tokens — such as mobile wallet providers, merchant apps, wearables, Internet of Things devices, among others — to get them more easily through only one integration, therefore encouraging their adoption.
“Merchants and consumers will be able to use new and innovative ways to pay, and the developers will not have the overhead of delivering solutions that work with each scheme.”
Mastercard first unveiled its plans to incorporate tokenization technology into Masterpass during the payment network’s 2014 year end earnings call in February 2015 and went on to do so in July this year.
Visa set out its tokenization expansion plans in February last year, which included the expansion of its Visa Token Service (VTS) to online transactions made through Visa Checkout. It opened up its VTS platform to third party suppliers in October 2016.