Card Processors’ Mobile Token Standards Face Consumer, Tech Hurdles

While the big three credit card processors unveiled a grandiose plan for global standards to streamline mobile payments last week, actual implementation – and acceptance by consumers – of such a system is fraught with potential problems. In an attempt to streamline mobile transactions and decrease fraud, Visa, MasterCard and American Express said they would develop standards to replace traditional account numbers with a digital payment “token” for online and mobile transactions. In addition to boosting security, the tokens would eliminate the need for merchants to store consumers’ sensitive payment data, the card firms say. Consumers are used to utilizing their credit cards for payment – not a token – so the new system would likely require signification education and an acceptance learning curve. At the same time, shoppers already trust Visa, MasterCard, and American Express when they make mobile payments, so perhaps that will make the shift to a token system smoother. Still, there are a number of other challenges that would need to be addressed before implementation. The business model around mobile is still developing and there are many unknowns. The card processors will need to determine which party will secure the token, decide whether the token is a mechanism for physical point-of-sale payments, and what form the token will actually take, Jeff Crawford, senior consultant at First Annapolis Consulting, told Mobile Commerce Daily. The card processors also need to be more transparent about the underlying technology that would be utilized for the token. Since there are a number of competing mobile payments technologies – including QR codes and low-energy Bluetooth – they will need to determine which system is most-reliable and can easily be adopted. While we laud Visa, MasterCard, and American Express’s lofty goals of a token system for mobile payments, the development of the token’s technologies and standards face significant hurdles and will likely take years before actual implementation.