Despite the appearance of conflict, the push to standardize a security method called tokenization is proceeding in the spirit of cooperation.

The Clearing House and EMVCo launched separate efforts to develop standards for tokenization, a process that replaces sensitive account data with a secure token. But now, their paths are converging.

Initially, The Clearing House formed a group of banks to create specifications "because no one had established standards that would work for all banks and all wallets," said David Fortney, senior vice president of The Clearing House, which establishes payments systems for the banking industry.

"But this is not all that complicated, and it's possible there is not as much drama here in the standards as some folks suspect there is," Fortney added. "Our intention is to be consistent with the EMVco framework, and as long as that framework meets the safety and soundness requirements of consumers, banks and merchants then we would not publish anything separate."

The Clearing House joined EMVCo a few months ago and is participating in the tokenization work group. Two years ago, such collaboration was far off the radar.

The Clearing House worked on its own tokenization version through 2012, meeting with technicians to establish standards that it tested through the fourth quarter of 2013 and introduced in early 2014.

However, the major card brands that collectively own EMVCo, the standards body for EMV operations, began seeking input on a global standard for card and card-not-present tokenization standards at about the same time in early 2014.  

That came as a surprise to The Clearing House, Fortney admitted. "We were focused on the physical point of sale in the U.S. and when we started our effort, we weren't sure the card networks were going to [develop tokenization]," Fortney said.

The Clearing House initially invited the card networks to participate in the banks' pilot programs, but instead the networks preferred to work on international standards, Fortney added.

"They think EMVCo is the right place to propagate these standards because it is global and it is the same place other EMV standards are established," Fortney said. "To be honest, we didn't know much about EMVCo at the time."

After EMVCo established its framework for tokenization in March, The Clearing House began working more closely with the standards organization.

Merchants in particular had expressed uncertainty over the possibility of competing, proprietary standards for tokenization. Fortney was concerned for other reasons.

"We were nervous about the EMVCo framework in that we might end up with something totally different from what we were doing," Fortney said. "We looked at their standards, and thought some things were different, but the lion's share of this is extremely consistent and even pretty exact, or functionally equivalent."

The Clearing House was pleased to see one of its key concerns — inclusion of a secure issuer vault to store tokens on behalf of multiple issuers — addressed in the EMVCo standards, Fortney added.

"So far, my indications are that everyone wanted to get this right and get any debates resolved quickly," he added. "We are going down the path assuming that they are open to suggestions for changes."

Input from The Clearing House will likely focus on addressing various "exception-use cases" such as chargebacks, lost or stolen cards or lost mobile or digital wallets, Fortney said.

American Express, Discover, JCB, MasterCard, UnionPay and Visa collectively own EMVCo.

Subscribe Now

Authoritative analysis and perspective for every segment of the payments industry

14-Day Free Trial

Authoritative analysis and perspective for every segment of the industry