On October 1, 2013, Visa, American Express and MasterCard introduced a proposed framework for a new global standard to enhance the security of digital payments when shopping online or on mobile phones. The proposed standard would permit account numbers to be replaced with a digital payment "token" for e-commerce and m-commerce transactions. Shoppers will no longer need to input their account numbers during the transaction. Through tokenization, the account number is replaced with unique identifiers.
Through the use of tokens, merchants and digital wallet operators will no longer need to store account numbers. The proposed global standard will be based on existing industry standards.
Over the coming weeks, the networks plan on presenting the proposed framework to independent industry bodies such as the PCI Security Standards Council. Financial institutions and online merchants will need to keep apprised of the developments regarding this proposed standard which will likely result in partnerships with tokenization service providers.
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