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Secure Cloud

Banks and Payment Networks Work to Create Mobile Payments Security Standards

The momentum to address data security concerns surrounding online and mobile payments is gaining steam. Payment networks Visa, MasterCard and American Express recently introduced a proposed framework for new global standards that would replace traditional account numbers with a digital payment token for online and mobile transactions. The tokens would provide an additional layer of security and eliminate the need for merchants and other parties to store sensitive payment data.

"I think the sentiment behind this announcement is encouraging … Digital commerce is a very attractive target for fraudsters, [and fraud] will continue as long as the card-not-present channels rely upon static data," said Julie Conroy, a research director for Aite Group in a recent PaymentsSource story.

"Replacement of the 16-digit card number with a token could also make the mobile experience easier," since the standard would allow consumers to make fewer keystrokes to execute mobile transactions, Conroy added.

This effort follows The Clearing House's announcement this summer that Citigroup, U.S. Bancorp and other members of the industry trade group, are jointly working on a tokenization solution. The system, dubbed Secure Cloud, aims to provide a protective layer to customers who use the mobile wallets that have been developed by banks and nonbanks.

The Clearing House plans to run pilot tests of the program through next summer. It will initially test how the technology works at physical store locations, when customers wave their smartphones close to checkout readers, but it could eventually be used for e-commerce or other types of digital payments.

David Fortney, senior vice president of new product development at The Clearing House will lead a discussion at the ATM, Debit and Prepaid Forum on the topic of the secure cloud with JP Morgan Chase payments strategy executive Vin D’Agostino, and Richard Char, head of digital networks at Citi.

Participate in this, and many other mobile payment sessions at the conference.

See full conference agenda here.

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