New method of online payments being developed

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Three major banks recently introduced a proposed framework for a method of payment for people shopping on a mobile phone, tablet, personal computer or other smart devices. 

Visa, MasterCard and American Express want to replace the traditional use of credit or debit cards for online payments with a digital payment token.

With a token, consumers would no longer be required to enter an actual account number when shopping online or on a smart device.  Tokens will provide an additional layer of security and eliminate the need for merchants, digital wallet operators or others to store account numbers.

Once a standard is agreed to and implemented, issuers, merchants or digital wallet providers will be able to request a token so that when an account holder initiates an online or mobile transaction, the token – and not the traditional card account number – would be used to process, authorise, clear and settle the transaction in the same way traditional card payments are processed today. 

Tokens will have the ability to be restricted depending on the merchant, device, transaction or category of transactions.

The proposed framework has incorporated the input of many stakeholders, particularly card issuers and merchants. Over the coming weeks, the framework will also be presented to other partners and independent industry bodies to align and further advance the standard.