A report produced by the Federal Reserve Bank of Boston and the Mobile Payments Industry Workgroup (MPIW) concludes that tokenisation could help instil confidence in the battle against fraud.
According to the MPIW, payment tokenisation is the process of randomly generating a substitute value to replace sensitive information. This system has been used in financial transactions to mask credit and debit card numbers, improving security.
“The security of mobile payments has always been a top concern and one of the main barriers to widespread adoption of certain mobile and digital payment technologies,” said Marianne Crowe, vice president of payment strategies at the Federal Reserve Bank of Boston and chair of the MPIW.
“With the recent introductions of new platforms that use tokenization technologies including ApplePay, we are even more convinced of the need to evaluate the optimal approach to tokenization and determine how the payments industry can better coordinate efforts to protect consumers and businesses alike.”
It is thought that tokenisation could also solve a number of issues related to mobile and electronic payment adoption. Susan Pandy, co-author of the meeting summary and director of payment strategies at the Federal Reserve Bank of Boston, said: ”What is new about tokenization is the need for interoperable, open standards, and the increasing desire to replace payment card or bank account numbers with tokens for point-of-sale, online, or mobile payments.”
However, the Federal Reserve also said that more development is needed to help iron out some of the issues, with many industry players struggling with hurdles that prevent them adopting tokenisation.
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