Mastercard and Visa sign tokenization agreement

Every day, more and more people are using connected devices to pay for things, with some experts predicting digital payment adoption could represent 20-30% of consumer payments by 2020. Core to this adoption is the reality that it’s not just laptops, tablets and phones being used to make payments; rather, you’re seeing things like wearables and IOT devices – including some household appliances like refrigerators – becoming payment devices as well.

But what threads these and other recent digital payment innovations together is the digitization and tokenization of card credentials.

Mastercard and Visa have signed a tokenization agreement that will allow Mastercard to request tokenized Visa credentials from Visa for provisioning into Masterpass and Visa to request tokenized Mastercard payment credentials from Mastercard for provisioning into Visa Checkout. The agreement will “accelerate the adoption of tokens” across both digital payment platforms, says Mastercard’s James Anderson.

„The reciprocal tokenization agreement allows Visa to request tokenized Mastercard payment credentials from Mastercard for provisioning into Visa Checkout, and Mastercard to request tokenized Visa credentials from Visa for provisioning into Masterpass. By allowing each network to request tokenized payment credentials from the other network, this agreement will ensure that each network’s wallet solutions can continue to stay open to other card brands while also adding the extra security of using tokens in place of real card numbers.” according to a Visa press release.

„With each network now able to request tokenized payment credentials from the other network, this agreement will benefit our merchants, our issuers and consumers—many of whom have multi-brand relationships. This agreement will expand tokenization availability to merchants and issuers, helping further encourage the use of tokens for Visa Checkout instead of personally-identifiable account numbers, and ultimately extending the proliferation of secure, digital payments.”, the company says.

„By allowing each network’s respective wallet service to leverage the token solutions of the other network, this agreement will ensure that each network’s wallet solutions can continue to stay open – and can add the extra security of using tokens in place of real card numbers. We’ve seen a fantastic response to Masterpass from both banks and merchants alike, and see this agreement as another positive development in the product’s continued adoption.”, says MasterCard.

The Token Service standard is a security technology that replaces cardholder information, such as account numbers and expiration dates, with a unique digital identifier (a “token”) that can be used for payment without exposing a cardholder’s more sensitive account information. Tokenization hides consumers’ confidential account information during digital transactions, making digital payments more secure for everyone, everywhere.