Mastercard’s Tokenization, and Consumer Choice, Made Digital-First Apple Card Possible

Mastercard’s tokenization technology made the digital-first Apple Card possible, but purely from a technological standpoint, Jorn Lambert, EVP, Digital Solutions at Mastercard, told Bank Innovation. It was the evolution of consumers’ and merchants’ preferences in how they make and receive payments that made the card a reality.

Apple last month unveiled its plans to launch a virtual credit card product with Mastercard and Goldman Sachs as soon as this summer. Although it will reside within the Wallet app on Apple devices, there will also be an accompanying physical card, made of titanium, with a laser-etched name but without a card number, CVV code, expiration date or signature.

“At the core of this announcement are our token services and M Chip technologies that help store the card on a digital device without exposing important details and also enable fast contactless payments – making the customer experiences fast, simple and secure,” Lambert said.

Also see: Apple Unveils iPhone-paired Apple Card

Mastercard brought token services to Apple Pay in 2014 and last year announced its strategy to enable token services on all cards by 2020.

“Just like the EMV chip has brought security to the physical world, tokenization everywhere is critical to secure the digital world,” Lambert said.

With token services, he said, consumers can store their card credentials with a merchant or retailer without the risk of exposing their actual card account details. He said this adds another layer of security to online transactions without sacrificing convenience.

“It also prevents service disruptions with a consumer’s favorite merchants by automatically updating card credentials should a card expire or need replacement,” Lambert said.

Asked why having no card numbers, expiration dates, CVV codes or signatures on cards is a measure the industry has yet to widely adopt, he said the use of digital payments is still only on the rise. He said that Mastercard, for one, aligns itself with how people choose to pay.

Lambert cited a consumer payments study by processing firm TSYS, which found that 68% of consumers who loaded a debit or credit card onto a mobile wallet indicated they expected to make half or more of their in-store purchases using a digital wallet within two years.

In the physical world, he explained, Mastercard transitioned to EMV, made signatures optional and then removed the requirement for signatures. It’s now creating acceptance for contactless, he added.

In the digital world, the company introduced token services in 2014 and last year announced its support of Secure Remote Commerce, or SRC, which is essentially an industry effort to extend the EMV standard to online checkouts.

Lambert said the Apple Card is just the latest manifestation of where the company sees the payments segment heading.

Asked what it would take to go from a digital-first card to a digital-only card, he said Mastercard’s goal is only “to provide consumers and merchants choice in how they want to pay and what type of payments they want to accept.”

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