A tokenization services vendor has shifted its emphasis from the core to the edge of retailers’ computer systems and is seeking independent sales organizations to promote its product.
Tulsa, Okla.-based TokenEx LLC, which has been operating for 18 months, began by offering to incorporate its software into nearly any IT system, Alex Pezold, the company’s CEO, tells PaymentsSource.
“The company was trying to be everything to everybody,” Pezold says. “We were trying to tokenize everywhere you could tokenize.”
Tokenization obfuscates the payment card number so it can never be reverse-engineered, making it useless to thieves who hack into computer systems to steal data for fraudulent purchases.
But problems occurred when TokenEx integrated tokenization into the core of legacy IT systems, Pezoid says. The process required TokenEx to hire consultants, and this became too costly.
Expenses could run as high as $50,000, which was only $30,000 short of the cost to replace the whole system, he notes.
Moreover, IT vendors were slow to cooperate with TokenEx when the security vendor wanted to incorporate its software into a legacy system, Pezold says.
As a result, TokenEx is now concentrating on tokenization at the edge of systems, which means the company’s software creates the token as the information enters at the point of sale instead of somewhere downstream in the IT system, he says.
Tokenization also offers the advantage of protecting data earlier instead of later and thus eliminates the window of time when hackers could steal it, Pezold maintains.
Earlier tokenization does not interfere with capturing transaction data for analytics that some merchants are beginning to demand, he says.
TokenEx also helps merchants by hosting pages with fields that online shoppers fill out. By removing those pages from the shopping site, TokenEx absolves the merchant from some responsibilities for the Payment Card Industry data security standards, says Pezold.
Merchants using the service would fill out only the questionnaire to state that a third party is handling their card services, he says.
TokenEx makes the pages it hosts for merchants look like part of the online shopping site, Pezold says. A jarring difference in the appearance of the pages could make shoppers suspicious, causing them to abort the purchase, he contends.
Other vendors offering a similar service often put their boxes on a portion of the screen, which also creates a potentially upsetting look, Pezold says.
TokenEx charges by the transaction, which ISOs can mark up when they offer the service to retailers, Pezold notes. The vendor would consider charging by the month to attract smaller merchants, and ISOs could mark up those fees, too, he says.
Selling points include reduced risk and an end to PCI fees for failing to comply with standards, Pezoid says.
“Our goal is to grow in the ISO and agent market,” Pezold says.
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