Rival credit card firms — Visa, MasterCard and American Express introduced a new framework for a new standard to enhance digital payments security and simplify the shopping experience on connected devices.
The new standard is important as the U.S. Census Bureau says roughly six percent of retail sales are conducted digitally, up nearly 200 percent since the first quarter of 2004.
The proposed standard would meet this consumer demand and allow the traditional account number to be replaced with a digital payment token for online and mobile transactions, they said in a statement.
With a token, consumers will no longer be required to enter an actual account number when shopping online or on a smart device. Tokens provide an additional layer of security and eliminate the need for merchants, digital wallet operators or others to store account numbers.
To ensure consistency across the globe, the proposed standard used to generate tokens would be based on existing industry standards and would be available to all payment networks and other payment participants.
“As more consumers make purchases with mobile phones, tablets and PCs, we are committed to showing industry leadership in the development of new standards that offer the same interoperability, reliability and security as traditional card payments,” said Jim McCarthy, global head of Innovation and Strategic Partnerships, Visa.
Ed McLaughlin, chief emerging payments officer, MasterCard, said today’s introduction is comparable to how the industry came together to develop and use the magnetic stripe, EMV and NFC on a global scale.”