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Writer's pictureFraud Practice

MasterCard Forms New Partnerships to Proliferate Use of Tokens

MasterCard seeks to solidify their place as a premier token service provider as they recently formed partnerships with Synchrony Financial and Citi Retail Services to support tokenization for several private label payment cards. The card association also announced plans to expand token services for mobile and eCommerce merchants with recurring billing and card-on-file programs.


The card associations ramped up their offerings around tokenization coinciding with the launch of Apple Pay, but there are several applications for issuer-based tokens outside of mobile payments. MasterCard’s Digital Enablement Services (MDES) additionally provides tokenization to reduce data breach risk exposure for eCommerce merchants and others that maintain payment card information on file or have recurring billing business models.


These issuer-based tokens are what are used with Apple Pay, Android Pay and Samsung Pay. The merchant never receives the actual payment card information, and neither does their processor. Rather they are provided with a token which the card association can connect to the card issuer for authorization, and as a result the merchant can receive an authorizations response and process the transaction without needing to possess or transmit the 16 digit Primary Account Number (PAN).


Expanding this service beyond mobile wallets and directly to merchants, MasterCard will enable issuing banks to offer merchant-specific tokens through MDES, their token service. Visa made a similar announcement earlier this year saying their Visa Token Service (VTS) will offer merchant-specific tokens as well. Relying on tokens rather than stored payment card information not only reduces the scope of PCI and risk exposure to data breaches, but it has potential sales conversion benefits as well. When payment cards are updated or re-issued MasterCard will automatically update this information with the associated token, such that calling the same token references the updated card.


The other major announcement from MasterCard in June was their partnerships with Citi and Synchrony Financial, which was spun off from GE Capital. Through these partnerships MasterCard will be able to offer token services to several private label or store-brand payment cards including those from Kohl’s, BJ’s Wholesale, and J.C. Penney. Having access to these tokenization services is a prerequisite for use of these cards in Apple Pay, and MDES will be supporting these transactions meaning cardholders can soon use them with Apply Pay and other payment methods that rely on this tokenization.


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