Visa readies network tokenization launch in Europe, sets the stage for Apple Pay debut
International payment network Visa on Tuesday announced that it would extend its network tokenization service -- one of the foundational technologies behind Apple Pay -- to Europe beginning in mid April, signaling that the first overseas launch of Apple's mobile payment solution may not be far away.
"We believe that 2015 will be the year that mobile payments will be in the hands of consumers across Europe," Visa Europe executive Sandra Alzetta said in a release. "Tokenisation is one of the most important technologies to emerge in digital payments and has the potential to start a whole new chapter in the kinds of products that are developed."
Tokenization -- substituting a new, relatively meaningless identifier in place of a consumer's actual account information -- is not a new concept for payments, but the launch of network-level tokenization with Apple Pay brought it into the brick-and-mortar world. Credit card tokenization was traditionally an online-only affair and token vaults, databases that map tokens to credit card numbers, were maintained by payment gateways.
Apple worked directly with credit card networks like Visa and American Express to move tokenization to their end of the chain. During Apple Pay transactions, tokens are translated into credit card numbers by the payment network, meaning that only the consumer's bank and the payment network have information about both the person and the transaction.
In addition to the obvious privacy benefits, network-level tokenization also provides significant security enhancements. There is no risk of credit card numbers being stolen by breaching computer systems at merchants, for instance, and tokens can easily be revoked and re-issued in the event of a lost device without altering the customer's account number.
While network-level tokenization is now part of the EMV payment specification, Apple was the first mobile payment provider to embrace it and is thought to have been a catalyst for its implementation. American Express and Mastercard have yet to announce similar European rollouts, but they are likely to follow quickly on Visa's heels.
"We believe that 2015 will be the year that mobile payments will be in the hands of consumers across Europe," Visa Europe executive Sandra Alzetta said in a release. "Tokenisation is one of the most important technologies to emerge in digital payments and has the potential to start a whole new chapter in the kinds of products that are developed."
Tokenization -- substituting a new, relatively meaningless identifier in place of a consumer's actual account information -- is not a new concept for payments, but the launch of network-level tokenization with Apple Pay brought it into the brick-and-mortar world. Credit card tokenization was traditionally an online-only affair and token vaults, databases that map tokens to credit card numbers, were maintained by payment gateways.
Apple worked directly with credit card networks like Visa and American Express to move tokenization to their end of the chain. During Apple Pay transactions, tokens are translated into credit card numbers by the payment network, meaning that only the consumer's bank and the payment network have information about both the person and the transaction.
In addition to the obvious privacy benefits, network-level tokenization also provides significant security enhancements. There is no risk of credit card numbers being stolen by breaching computer systems at merchants, for instance, and tokens can easily be revoked and re-issued in the event of a lost device without altering the customer's account number.
While network-level tokenization is now part of the EMV payment specification, Apple was the first mobile payment provider to embrace it and is thought to have been a catalyst for its implementation. American Express and Mastercard have yet to announce similar European rollouts, but they are likely to follow quickly on Visa's heels.
Comments
Really looking forward to using Apple Pay in London with the Apple Watch. Everywhere I go already has NFC payment machines. Fingers crossed for London Underground support too.
Will this extend to Android phones or only iPhones? If not, will Visa allow credit card information to be stored on android phones (Softcard, etc)? If tokenization is the best and safest way to handle mobile transactions why would banks and credit card companies even use something else?
There's specifically designed hardware in the iPhone 6 and 6 Plus to support that system do any Android phones include that same chip? Big systems take time to change, look at how long the United States has lagged behind with our vulnerable magnetic swipe system...
Google and Samsung: Wait! We're still trying to figure out the US! Don't leave us again!
I don't why Google would change anything. They want to be the man in the middle seeing everything you do. What you buy, How much and from who. All valuable Data which is why these large company's save all that data along with your credit card number when in turn gets hacked. While I don't see Google getting it's Database hacked. They won't change much on how things are done, just expand on it. As for Samsung, like their other services they've tried to offer, it'll fail. Unless Google doesn't expand out of the U.S. Then out of the U.S. it might be used, otherwise it'll be other failed service because Android users want to use Google's Services and not someone else. Which is once of the issues making Android phones. You make razer thin to no profits and can't even make money after the sale.
Apple Pay hasn't really been out long. I'm guessing there's around 90 million iPhone 6 and 6+ sold so far world wide. That's really a tiny fraction of phones out in the marketplace right now. So rushing out Apple Pay for a few people is pointless. Get it working like it should and any bugs fixed, while numbers are still low in the U.S. and in 2015 expand world wide as best you can. It sure won't be over night. Continue to expand and get that second generation iPhone out with NFC. Google has been at it for 4 years, It's only been 4 months for Apple. Again a single company to many company's.
Really looking forward to using Apple Pay in London with the Apple Watch. Everywhere I go already has NFC payment machines. Fingers crossed for London Underground support too.
Does the Underground accept NFC cards? If so it's likely going to happen, even US transit systems setting up NFC (Philadelphia, don't specifically about D.C. that has NFC up and running) have stated they're working towards ApplePay.
Good question, I suspect that Apple educated VISA on their solution and the fact any android phone today would store the token in memory on the phone not in a security chip like Apple is secuitry risk that Visa may not want to take on. Also Apple's security chip also auto generates the unique token for each transaction. Unless someone can hack the chip in real time it hard to get the unique algorithm use in real time.
I suspect that VISA will not extend their token down to an android phone which uses software to protect the token verses a hardware based solution. Yes Google can come up with their own token system but that will be between the phone and google not to the bank or Visa. I would imagine that each hardware manufacture will have to come up with their own Security chip and them demonstrate that it is secure before VISA will allow their token system to be stored on a android phone.
Apple set the bar pretty high here and no company outside of Apple owns all the pieces so all the parties on the other side will have competing interests and it will take time before they all come together with a solution which will match what apple is doing. It is was so easy we would have seen this solution yrs ago.
I suspect that VISA and others may hold Google responsible to any fraud transaction in the future if they are the one processing the CC transaction. You can imagine they Apple may have this risk in their agreement with CC and Bank companies. But it low due to Apple's solution.
I don't why Google would change anything. They want to be the man in the middle seeing everything you do. What you buy, How much and from who. All valuable Data which is why these large company's save all that data along with your credit card number when in turn gets hacked. While I don't see Google getting it's Database hacked. They won't change much on how things are done, just expand on it. As for Samsung, like their other services they've tried to offer, it'll fail. Unless Google doesn't expand out of the U.S. Then out of the U.S. it might be used, otherwise it'll be other failed service because Android users want to use Google's Services and not someone else. Which is once of the issues making Android phones. You make razer thin to no profits and can't even make money after the sale.
Apple Pay hasn't really been out long. I'm guessing there's around 90 million iPhone 6 and 6+ sold so far world wide. That's really a tiny fraction of phones out in the marketplace right now. So rushing out Apple Pay for a few people is pointless. Get it working like it should and any bugs fixed, while numbers are still low in the U.S. and in 2015 expand world wide as best you can. It sure won't be over night. Continue to expand and get that second generation iPhone out with NFC. Google has been at it for 4 years, It's only been 4 months for Apple. Again a single company to many company's.
Working out the bugs was the GoogleWallet fiasco. That's what Apple used as what NOT to do. As you said, Google has had four years to get its sh!t together, and nothing. Do you even hear about Google trying to fix up GoogleWallet? No. I'm sure they don't like where it's going using ApplePay's token method that keeps all information private.
To my knowledge, there has been no ApplePay fiasco, hack, or break-in... yet. There are already millions of ApplePay transactions going on, more than GoogleWallet has had in its entire, botched existence.
Crossing fingers.
Funny how some people always lambast Apple for introducing this or doing something in the US that is not available worldwide. This is the perfect example of how all things are not in their control.
Who will be the first bank that offers a $500 cashback bonus for the first $500 charged using Apple Pay?
For those who don't have an iPhone 6 or later, but an iPhone 5, 5C or 5S -- they will need to buy an Apple Watch to take advantage of the $500 bonus ...
How will they pay for the for the Apple Watch -- you guessed it ... [B][I]They will [COLOR=blue]Buy the Apple Watch[/COLOR] with the [COLOR=blue]Apple Pay cashback bonus.[/COLOR][/I][/B]
In my opinion VISA executives are interested in profits, not in brand wars.
So they will likely push other solutions to android/WP, with the same conditions, else they will restrict themselves from having a product for 80% of worldwide smartphone owners. They simply cannot afford to lose 80% of market (in number of customers, not in money spent, of course).
Woo hoo Apple Pay in the UK. Now see the numbers go. Woo hoo!!
Lets see what happens.
In my opinion VISA executives are interested in profits, not in brand wars.
EMV are also interested in security/minimizing risk, using fully audited technology. Hopefully Google and Samsung obtained the blessing of the EMV group before making their recent mobile payment deals. not that I care.
I will likely be upgrading to the 6S with my wife up here in Canada, and from what I've heard, ?Pay should be fully rolled out here by then, and I cannot wait!
From what I've been told, 90% of the businesses in Canada support NFC. That being the case, you should be able to use Apple Pay at most places once it's launches.