In digital commerce, promise and peril co-exist. Payments fraud is continuously moving from offline settings into the online realm.
To that end, Visa said this morning (June 25) that it has inked a deal to buy the token services and ticketing business of chipmaker Rambus. The assets acquired were formerly known as Bell ID and Ecebs Ltd. Financial terms were not disclosed. As detailed in the release heralding the acquisition, Visa said the combination of its extant tokenization offerings with the local and account tokenization enabled by Rambus will help secure payments of all types done across the globe.
Visa has long since offered tokenization through its Visa Token Service for card-based payments on its network. Now, the addition of Rambus’ token technology will help Visa extend its security and convenience to transactions done beyond the confines of Visa’s cards, including account-to-account transactions, payments done on domestic card networks and payments done across real-time payment systems. The assets gained in the acquisition help banks control or suspend tokenized bank account numbers, limit token use to specific channels and even set spending limits.
The token services already reach 100 markets, which account for 90 percent of Visa’s total payments volume. The strategy, simply put, is to scale that scale ever more globally.
In an interview with Karen Webster, TS Anil, Visa’s senior vice president and global head of payment products & platforms, said that while “we’ve been focused on tokenizing Visa card transactions, the need for tokenization, the need to secure digital payments, exists across multiple form factors of payments.”
Against that backdrop, in the build-versus-buy debate, the executive said the decision came down to buying the added capabilities that come with Rambus’ holdings. The combination allows Visa to build on existing capabilities, “rather than starting from scratch.”
The Roadmap Ahead — And Faster Payments, Too
With a nod toward Rambus, he said, “These guys have already been experimenting with different types of token use cases, including account-to-account or real-time payment tokens,” and in other endeavors to tokenize ticketing and blockchain. Those latter initiatives, he added, “are the further out stuff.”
Looking at the short- and medium-term roadmaps, he noted that Visa’s focus will be to make sure that existing clients — such as Interac, TCH and others — experience no disruption in service as a result of the acquisition. The second (and concurrent) leg of strategy will be to tokenize existing transaction flows, notably account-to-account activity, which includes ACH, Same Day ACH and real-time payment transactions.
The stage is set, Anil and Webster agreed, to incrementally build confidence in faster and real-time account-to-account payments through the use of tokenization. There is a palpable nervousness on the part of senders and receivers about fraud wrought across nascent real-time rails, since payments are irrevocable.
Anil noted that, when it comes to faster payments, “lots of different things will determine how far these ultimate payment systems scale. Tokenization can certainly help drive more confidence,” though it may not be a primary driver.
Other ripple effects may be in the wings of other payment areas. After all, Visa’s issuer clients move money from account to account, spanning P2P and B2B transactions, and those transactions are, as of yet, untokenized. Anil mused that “it’s possible” for new payment streams to come online with more widespread tokenization and greater confidence in digitizing new payment types.
There will also be exploration of applying the enhanced and broadened tokenization of the Visa/Rambus platform to those Visa-specific initiatives that lie beyond the cards’ domain — such as Visa B2B Connect, an initiative designed to improve the speed, safety and transparency of funds moving between bank accounts cross-border.
Down The Road
It’s difficult to predict the future. However, down the road lies opportunity to intersect with respect to Secure Remote Commerce (SRC).
Webster noted that Rambus offers software that acts as a gateway to third-party tokenization services. This allows users to tokenize card-on-file data using EMVCo tokenization. Solutions enable the digitization of gift and loyalty cards, and the ability to request tokens for eCommerce and digital wallets.
SRC is a “couple of layers down” for Visa’s deployment of tokenization turbocharged by Rambus, he said, but the eventuality looms.
“Getting the card piece out there, and dealing with guest checkout, is a mammoth task for the industry,” explained Anil. “We have a lot of work before that,” as Visa sets out to distribute the acquired Rambus capabilities around the world and enhance them. “If we just do that through the next one to two years, we will be in great shape.”