The Federal Reserve Bank of Boston is to set up a working group to tackle the interoperability and technology challenges of using digital account tokens to replace card numbers for online and mobile purchasing.
The Fed's Mobile Payments Industry Workgroup (MPIW) says that developments in tokenisation should instill confidence in a payments environment challenged by frequent data breaches and other payments fraud activity. However, it cautions that some hurdles to broad industry adoption of tokenisation remain, particularly around standards and co-ordination of the different approaches taken by industry stakeholders.
In the US, bodies such as EMVCo, The Clearing House, and card networks, are focussing their efforts exclusively on payments, while others-such as the Payment Card Industry Security Standards Council and the Accredited Standards Committee X9-are designing protocols to protect stored card data or data at rest.
Marianne Crowe, vice president of payment strategies at the Federal Reserve Bank of Boston and chair of the MPIW, says: "With the recent introductions of new platforms that use tokenisation technologies including ApplePay, we are even more convinced of the need to evaluate the optimal approach to tokenisation and determine how the payments industry can better coordinate efforts to protect consumers and businesses alike."
To this end, the MPIW has established a tokenisation workgroup to assess issues related to the use of static versus dynamic tokens, how to prevent creation of fraudulent tokens, use of token risk assurance levels, as well as impacts to infrastructure, interoperability, and consumer usability.
The group will also conduct a "multi-stakeholder assessment that will include mobile payments industry perspectives on the challenges and opportunities surrounding payment tokenisation initiatives".
Deliverables will include a comparison and gap analysis of the current models, and recommendations for possible solutions to address the gaps.