The “Intel Inside” of Payments

TSYS’ enterprise tokenization initiative is just the latest step in its march to helping its issuing and merchant clients run their businesses more efficiently. Paul Bridgewater, TSYS Group Executive, Global Product & Innovation says that tokenization and keeping data secure is just one of the conversations that its clients are “leaning into.” Bridgewater tells MPD CEO Karen Webster how TSYS’ approach to securing, analyzing and then helping its clients use that data to engage their customers is what makes TSYS the “Intel Inside” of payments.

KW: First of all, I’d like to get your take on tokenization, broadly speaking. Why is it so important now for payments?

PB: Tokenization provides an added layer of security for cardholders, merchants and issuers. It substitutes the PAN with a token while the data is in flight or at rest in the issuers’ system. Even if the bad guy is able to obtain the token number, they can’t use it for any fraudulent activity – it’s really useless, it has no value to them. So fundamentally, we think that the game changer is that the PAN is never exposed in the end-to-end transaction.

What’s also unique is that the tokenization solution, like that which TSYS is bringing into market, allows for a token to be deployed at each individual device with which a consumer engages in a transaction. Each device that a consumer has can become a token requester – it’s not just linked to one specific card, it’s a many-to-one relationship. That takes transaction tracking, analytics and security to a completely new level.

KW: That sounds like a very unique approach.

PB: Definitely, and tokenization from our perspective is very much geared around combating fraud. Fraud strategies at companies require a layered approach and continued investment. Just as EMV stands to reduce card present fraud, tokenization dramatically makes it more difficult for fraudsters in the card-not-present transaction space. Merchants will no longer have that risk in storing the actual card number, and cardholders no longer will need to provide that card number in the online environment. Issuers will receive an additional layer of full protection and security as part of their own fraud plan. This is an addition to tools and services that issuers and merchants have today to combat fraud.

We think it’s exciting, and we think that as EMV rolls out in the US market, this tokenization solution is a way to protect the shift we say in the UK market of fraud moving from offline channels to online channels.

KW: It sounds to me like there are lots of ways in which third parties and the networks and others are approaching the topic of tokenization. How do you suggest we sort this out without a standard today?

PB: You’re right, up until now there hasn’t been any standard or primary solution in the market. But after recent announcements from card brands like Visa and MasterCard about their tokenization services, that’s something we’re on top of. What what we’ve done is work with the brands extensively to embed their functionality and tokenization services into our end-to-end issuer and acquiring solutions. We’ve adopted what we believe will become the industry standard for tokenization and is something we believe will become more used by online shopping retailers, wallet providers, in-app purchases, providers of online shopping carts, and more.

KW: This sounds relevant to TSYS’s Connected Mobility agenda. Is tokenization a major component of that initiative?

PB: It is, and we treat our customers’ security with the absolute highest regard – protecting their data is the number one priority. When we launched our connected mobility agenda, we stated that payments was one of the critical components of that agenda, and up until now, we’ve been focusing a lot of our time on NFC enablement within a Canadian market, QR code transaction enablement, and now with tokenization, this is yet another form factor that can be used to initiate a transaction in a card-not-present space. We are executing across the enterprise of TSYS around this solution, from our issuing businesses to our merchant acquiring businesses to our prepaid businesses with NetSpend.

KW: You do have an interesting perch from which to look at this aspect of payments. What are you hearing from the issuing, merchant, and prepaid side of your business with respect to what you’re doing?

PB: I like to say that our clients are “leaning in.” Basically, we have been talking to our clients on the issuing and on the merchant side for months around the tokenization changes within the industry. That’s been very topical based upon the roll-out of EMV in the US market, so as merchants and retailers start to look at the investments they are having to make in new POS technologies and front end systems, they’re asking us to provide them with visibility into what the industry is doing now and what they should be preparing for or investing in for coming months.

Also, on the issuing side, as issuers start to ramp up EMV issuing programs, they are looking to us to help them understand how they deal with issuance from a customer-present and customer-not-present perspective. I think the whole tokenization solution within our industry and the shift that we’re seeing is fundamental to help them make the right decisions for their businesses, based on the solutions we’re providing them.

KW: Finally, give us a sneak peek of your roadmap – what else can we expect from TSYS in the coming months?

PB: Two areas come straight to mind. Again, we’re leaning in on data and analytics to help our clients grow their businesses. The other area is digital engagement – putting data to work in a real-time fashion for us at TSYS is really key. We touch about 5 petabytes of data on a daily basis, and it’s all moving in a real-time environment.

On the issuing side, we’re working on a solution called “actionable intelligence.” This provides issuers with a multi-dimensional visualization of their card portfolio, and based on how it’s performing in real-time and their business objectives, we will enable them to select strategies that will help them alter their portfolio dynamics. The solution includes a fully integrated multi-channel marketing capability that enables them to launch campaigns near real-time. We think this will be big in 2015.

KW: That really brings to mind the debate over big data or fast data, which is an interesting one because we have so much data available. The trick is how to put it together in pieces that matter and make it actionable.

PB: It is – it’s linking it to enable the ability to make real-time decisions on marketing spend and actually seeing the impact of it as businesses roll out these campaigns.

The other area is digital engagement – we’re working on a number of really exciting new products, focused on engaging with the consumer around the payment versus within the payment through multiple channels. The innovations are supporting the fact that commerce is changing – the payment is becoming more embedded into the user experience, and that makes consumers looking for more control delivered through a seamless engagement, much like Uber’s, for example.

We see us moving more toward becoming like the Intel chip in a PC.

Paul Bridgewater
Group Executive, Global Product & Innovation, TSYS 

Paul Bridgewater, a veteran of the payments and financial services industry, was named Group Executive of Global Product at TSYS in 2011. Prior to joining TSYS, Bridgewater served as senior vice president, payments, of Digital River, Inc., in Eden Prairie, Minnesota, where he managed all aspects of its multi-million dollar internal payment services business unit. Bridgewater’s additional responsibilities at Digital River included product management and roadmap execution, third-party payment vendor relationships, payment services strategy, and real-time fraud and risk mitigation for its external payment services business. Bridgewater also has extensive international payments experience, having worked extensively with Citibank International, NatWest Bank, PLC, and Anker Data Systems.

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