Visa Europe introduces ‘tokenization’, paves way for Apple Pay and rivals
Announced on Tuesday, Visa Europe’s move to introduce tokenization to member banks by mid-April could pave the way for Apple Inc.’s Apple Pay and competing mobile payment services to be introduced into Europe earlier than expected.
Tokenization provides consumers with a more secure way to use their credit cards at retailers via smartphones. The service masks a card holder’s credit card data by substituting a set of random numbers, or a “token”, when transmitting transaction data, thereby limiting the risk of online banking theft.
The same system used by credit card providers in the U.S. is what has made Apple Pay and other mobile payment services possible there. Visa Europe introducing tokenization will pave the way for mobile payment services across Europe.
Apple Pay lets iPhone users store their credit card details on their phones, then “tap-to-pay” at checkout where a secure token is used to protect customers’ credit card data. Last month Apple CEO, Tim Cook revealed that, in the first three months since its launch, Apple Pay accounted for two out of every three dollars spent via contactless payments on Visa, Mastercard and American Express.
Apple competitors, especially Google Inc., are also likely to benefit from Visa Europe’s new token service. Google announced on Monday that it acquired Softcard technology to improve its mobile payments service, Google Wallet; a move that is likely to expand its adoption by retailers and smartphone users. Google Wallet and Softcard use tokenization to secure users credit card data during mobile payment transactions.
In an interview with Reuters, Steve Perry, Visa Europe’s chief digital officer, said that Visa Europe’s plan for secure credit card data transmission mirrors what Visa Inc., an Apple Pay partner, offers in the U.S. He declined to comment on whether Apple had agreed to use Visa Europe’s token service when Apple Pay enters the European market.
“Apple and Visa (Inc) have an agreement around what has happened,” Perry said. “I am as excited as anyone, but we have to wait.”
Visa Europe has operated independently from Visa Inc. since 2007 and, as noted by Reuters, consists of 3,700 member banks across Europe with in excess of 500 million credit cards in circulation.
While it’s unclear when Apple intends to launch Apple Pay in Europe, reports late last year indicated that the company was in talks with at least one major U.K. bank about launching the service there.
