MasterCard’s Tokenization Breakthrough

MasterCard has formed new partnerships with Synchrony Financial and Citi Retail Services to take its tokenization efforts to the next level. 

That also includes a big step forward to offer tokenization services to merchants with apps, eCommerce and recurring billing card-on-file programs – all in the name of helping to better protect consumer payments data. 

The payments network announced yesterday (June 15) that it’s now the first network to add tokenization support for store-branded credit cards for use in digital wallets. This support will enable BJ’s Wholesale Club, Kohl’s and J.C. Penney to bring mobile payments to their private label cardholders this year. This is being done in conjunction with deals the card network made with Synchrony Financial and Citi Retail Services.

These tokenization services are being offered through MasterCard’s Digital Enablement Service (MDES), a service launched two years ago and popularized when Apple Pay was launched last fall. MDES supports NFC payments with a mobile device at a physical POS, along with mobile apps. Those transactions made using the digital wallet leverage the EMV standard.

“We’re seeing significant momentum and innovation around digital wallets, and a key focus for MasterCard is that consumers can leverage these new offerings safely and securely. MDES was developed to ensure that any connected device can be used to make purchases, and deliver the simplicity, security and convenience people have become accustomed to when using a MasterCard account of their choice,” said Ed McLaughlin, MasterCard’s Chief Emerging Payments Officer. “MasterCard is helping merchants capitalize on mobile payments, ensure the best possible consumer experience for their consumers and encourage both repeat business and customer loyalty.”

According to MasterCard, since the rollout of MDES two years ago, millions of MasterCard accounts have been tokenized for use in popular digital wallet services. MDES provides tokenization services for credit, debit, co-brand, prepaid and small business cards; the private label tokenization will begin in the third quarter of 2015.

Recently, it was also announced that Synchrony Financial retail partner, J.C. Penney, will be among the first retailers to offer its private label credit cardholders the ability to checkout with Apple Pay later this year. MasterCard will provide tokenization services that will support those transactions.

“Mobile payments provide merchants the opportunity to transform the customer shopping experience. With Synchrony Financial’s retail heritage and commitment to innovation, combined with our unique tokenization support for private label cards, we are thrilled to assist merchants in offering their customers the choice to use Apple Pay for easy, secure and private payments with any card they choose,” McLaughlin said June 8 when the Apple Pay deal was announced.

Although on some level, MasterCard competes with Apple Pay in the mobile wallet space with its MasterPass offer, the card network says that such partnerships demonstrate MasterCard’s commitment to furthering digital commerce overall and giving merchants and consumers payments choice.

“Thanks to our ongoing innovation and strategic partnerships, we are helping shape the future of how private label credit cards work in whichever digital wallet customers choose,” said Margaret Keane, president and CEO of Synchrony Financial. “We are committed to working with our retail partners, MasterCard, and key payments industry players to preserve the benefits of our private label credit cards and patented Dual Cards in third-party digital wallets.”

MasterCard Turns Stored Card Numbers Into Tokens

MasterCard also announced yesterday (June 15) that it would offer its tokenization services to merchants with app, eCommerce and recurring billing card-on-file programs. That extra layer of security enables merchants to better protect consumers’ payment data that is stored in the merchant databases, MasterCard states. This extension of MasterCard’s tokenization efforts is also part of the MasterCard Digital Enablement Services (MDES).

This capability, MasterCard emphasized, is more critical than ever since the average consumer likely has their card number stored in at least five merchant locations. Storing card information in apps and online is popular among merchants and consumers to reduce checkout friction and enable subscription-based services and recurring payments, but must be properly secured.

MasterCard’s new program allows for merchants to leverage MDES both to improve security efforts but also more easily overcome the friction associated with having cards on file expire or otherwise changed, which can interfere with sales conversions.

MasterCard will now be able to enable the card issuing banks to replace MasterCard credit, debit and prepaid card account numbers with a secure token — a new 16-digit number that represents the existing card number on the front of a payment card. Those tokens create a unique number so the merchant can offer their customers enhanced security measures. Furthermore, when a consumer’s card number or its expiration date changes, the tokens stored with all of their various merchants do not have to be updated.

“Merchants continue to innovate in many different and compelling ways for consumers to buy from them, including in app, eCommerce, recurring and subscription-based payment environments. These new experiences all involve storing card numbers,” McLaughlin said. “We are very excited to announce the extension of our industry-leading MDES program to make all of these merchant shopping environments more secure and convenient for their customers using MasterCard tokens, seamlessly enhancing the systems merchants and acquirers already have in place, and eliminating a significant ‘hassle factor’ for consumers when card numbers change.”

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