Visa and Mastercard | Reciprocal Tokenization

Jul 24, 2017

Visa and MasterCard are teaming up to make electronic payments safer. More than 6 months ago, Visa Inc. and Mastercard Inc. announced reciprocal access to one another’s tokenization engines.

Reciprocal Tokenization Agreement 

MasterCard and Visa released a statement, according to which the reciprocal tokenization agreement allows Visa to request tokenized MasterCard payment credentials from MasterCard for provisioning into Visa Checkout, and for MasterCard to request tokenized Visa credentials from Visa for provisioning into Masterpass.

Tokenization is the popular security technology that is developed to replace cardholder information, such as account numbers and expiration dates, with a token, a unique digital identifier, that can be used for making payments without exposing sensitive information associated with accounts.

Visa and Mastercard consider reciprocity more than just a fraud-prevention step. Thanks to such strategy, they can broaden the use of their digital wallets, extend access to their tokenization engines to third parties, and be the main token-service providers.

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What to Expect?

According to the 2 networks, thanks to reciprocity it’ll be easier for merchants to accept payments initiated through their respective digital wallets, Visa Checkout and Masterpass. Also, thanks to reciprocity, these wallets will turn into truly open payment platforms: only one connection to either network’s tokenization engine will be required.

Tokenization will help wallet providers protect cardholders by substituting randomized character strings for actual primary account numbers and other card credentials.

Reciprocity will enable Visa and Mastercard request tokenized payment credentials from one another for provisioning into Masterpass or Visa Checkout wallets. The networks have already started building out the infrastructure to support reciprocity. The service is expected to be launched on a region-by-region basis across the globe.

Zilvinas Bareisis, a London-based senior analyst for the financial-services consulting firm Celent, notes partnerships will help deal with the complexity of devices appearing in the market. Visa and Mastercard will provide the token, but the partner will provision it on its device as it understands best how the device can be certified and can organize its secure interaction with each payment endpoint.

As for fees, the experts in the field note fees could well be coming.

 

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Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

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A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

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