Citigroup, U.S. Bancorp and members of The Clearing House address negativity surrounding data security concerns with digital or electronic payments. A new system launched by the banks called Secure Cloud will add a layer of protection for mobile wallets. Mobile wallet providers such as banks, credit card providers and even non-bank providers such as Google Wallet and ISIS. Paul Galant, head of enterprise payments at Citigroup says “We want to see this type of innovation [digital payments] continue, and it needs to be built on a foundation that’s sustainable. In this era of cyberattacks, fraud and data breaches, the banking industry really can do a lot better.”
Secure Cloud which The Clearing House will begin testing later this year is designed to keep cardholders credit and debit card data from leaking into less secure and private databases operated by technology vendors and e-commerce merchants. Digital wallets make a smartphone or tablet device replace traditional physical wallets and allow cardholders to wave their smart phone or tablet near digital readers to complete an electronic payment at the point of sale, rather than swiping credit cards. Secure Cloud seeks to replace the credit card information in a phone or tablet’s wallet with a ‘token’. Tokenized data is a scrambled sequence of characters that can be used to satisfy an electronic payment shielding the credit card holder from 3rd party or merchant account data gathering. The mobile wallet uses the token instead of credit card data at the point of a digital transaction. Banks will then match the token from the electronic wallet to the actual credit card account leaving the merchant none the wiser. By not saving the credit card data onto the phone or tablet, security and privacy increases.
In the world of digital payment processing, thieves have targeted merchant accounts that store credit card and personal information rather than targeting the more secure banking defenses. As mobile payments proliferate, and payment systems evolve, we have a new opportunity to make our digital transactions more secure. The Clearing House plans to run tests in the fourth quarter of 2013 into next summer. US Bancorp will handle the merchant account end of electronic transaction through their Elavon acquiring unit. Although initial testing will involve smartphones and tablets equipped with Near Field Communications or NFC that provides tap to pay or wave to pay technology, Secure Cloud could eventually migrate to e-commerce and m-commerce mobile commerce payment systems.
Secure Cloud hopes to establish Open Standards available to banking and non-banking entities such as Google’s Wallet services. This will allow any digital wallet provider to adopt the standard and even build on it to ease the transition to mobile payment processing. Security and convenience are at the heart of the digital payment landscape and Secure Cloud hopes to provide the security end both to banks and mobile wallet users.