What do tokens, or digital replacements for sensitive payment account information,
particularly the primary payment card number (PAN), have in common with interchange and other fees linked to credit and debit cards?
Easy: Tokens, like transaction pricing, have become a battleground between competing interests in the payments industry.
For example, models under development include those from EMVCo, which is controlled by the major payment card networks, and The Clearing House, which is controlled by banks. Other proposals have come from the PCI Security Standards Council and the Accredited Standards Committee X9.
While there are plenty of technical matters to be settled, one of the hottest issues under debate is the use of static and dynamic tokens. Static tokens are easier to implement, but dynamic, or one-time-use tokens, offer even more security because they change with each transaction.
Meanwhile, some payments executives fear Visa and MasterCard are using closed token standards to extend the domination they enjoy in the magnetic-stripe card world into the emerging realms of Europay-MasterCard-Visa (EMV) chip cards and mobile payments. Others worry that separate groups are developing standards without enough back-and-forth among prospective token users and token originators.
In late July, several major merchant trade groups called for an open approach to tokenization, as did the Secure Remote Payments Council (SRPc), which represents debit networks.
The Mobile Payments Industry Workgroup (MPIW), a group formed under the auspices of the Federal Reserve banks of Boston and Atlanta and which includes payments executives, also urged the industry to find common ground on tokenization.
