Tokenization and payment
Amongst others, one innovation and two new technologies could reshape the payments landscape. The innovation is tokenization, with techniques consisting of replacing sensitive data (including the PAN – Primary Account Number) by a token (or data tokenization) that can be processed the same way, but cannot be used to complete fraudulent transactions. Tokenization payment processing has emerged as a new efficient defence against Card-Not-Present and mobile payment fraud. While helping to protect the PAN, tokenization could help reduce the complexity of the payments system for most players in the payment chain.
Blockchain and immediate payment
The two new technologies are blockchain and immediate payment. The blockchain technology, illustrated by the ‘bitcoin’, could accelerate the velocity of money and provide a path for legacy banking systems to interoperate, greatly improving efficiency. Central banks, financial institutions and technology firms are currently considering the blockchain technology opportunities and challenges. Immediate payment is also expected to have a profound impact on the origination, processing and reporting elements of the Payment Service Providers. Such payments could influence the pricing and security of products. As for users, immediate payments can deliver greater price transparency, faster transaction times, safer payment environments and enhanced user experience.
Finally, the on-going technological innovations such as tokenization payment are expected to give rise to more disruptions in the payments industry in the near future. A focus on client needs, operational agility and co-operation with industry players and regulators will remain the key success factors for firms, making it an exciting time for clients and market participants.
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