Visa Offering Fee-Free Tokenization Through 2015 (Nov. 24, 2014)
Payment card issuers looking to use Visa Inc.’s tokenization service will be able to do so with no fee until at least the end of 2015—and maybe further, according to the payment network’s CEO. Speaking at the Bank of America Merrill Lynch Banking & Financial Services Conference earlier this month, Visa CEO Charles Scharf said the move is an effort to spark adoption of tokenization—considered by many industry experts to be one of the most promising methods of bolstering payments security. Tokenization is the process of temporarily replacing a traditional primary account number (PAN) with a unique payment token, a series of numbers the same length as the PAN, that is restricted in how it can be used either to a specific device, transaction type, channel or merchant. In his speech, Scharf characterized tokenization as “the single biggest change that’s been made in the payment networks, easily, over the past 15 years,” identifying Apple Pay as an example of a product that “wouldn’t have been possible” without tokenization.
Given tokenization’s vital role in the development of the payments ecosystem at large, Scharf said, Visa doesn’t view its tokenization service—announced in September—as a revenue stream per se. Instead, developing the service was a way “to insert ourselves into digital commerce in a way that we and our clients control our own destiny and that’s huge,” he said, according to a report by PYMNTS.com. “We want people to adopt tokenization.” Scharf noted that the longer-term tokenization pricing is still being decided and left open the possibility of monetizing the service beyond next year. Along with its own tokenization service, Visa also is a member of EMVCo, a partnership between major payments networks, which in March released a set of specifications for tokenization, inviting payments industry participants to provide feedback on the proposal.
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