By WhatsApp, phone or mail, stories of digital scams in which private bank details are stolen have resonated lately. To combat them, financial services companies are innovating to prevent fraud and make digital transactions as safe as possible.
One of these processes is tokenization. “Paying in the digital world, this concept which began to be implemented between 2019 and 2020 allows you to convert the card number into a tokenthat is to say in a cryptogram (a 16-digit number) which replaces this card number and which is unique for the card itself, the customer and the transactions of a single company”, summarizes Gabriela Renaudo, CEO of Visa Argentina and Cono Sur (Argentina), Chile, Uruguay, Paraguay and Bolivia), and adds about this technology: “It goes hand in hand with the technology without touching (contactless payment), which allows you to do so simply by approaching the card at the payment terminal. It works on smart cards and allows payment by simple contact with the payment terminal (meaning that there is no need to insert or swipe them)”. The executive further explains that contactless payment is fast, secure, eliminates the use of cash.
How it works? Renaud explains that the user must start by registering their card in their digital walletof which in Argentina there are more than 30 different, such as MODO or Mercado Pago. At the time of purchase initiation, before sending the card number to make the payment, Visa is automatically asked to replace the card number with the token, then all purchase transactions that the customer makes in this store from this device and this card will always be made with this token. If one of these three factors changes, a new one is generated. This limits the circulation of essential data such as the card number, its data and the security code, and replaces it with cryptograms.
To represent it graphically, Renaudo illustrates: “The card saved in a certain digital wallet that subscribes to a streaming platform like Netflix has a specific token to pay. This same card loaded into the same wallet generates a new token if that same person bought shoes through e-commerce from a shoe brand, since it is a different company. Other, if this same card has been loaded into another digital wallet or on another smartphone and wishes to pay for the same service mentioned above, a new token would be generated because the application or device from which the transaction is made would change. In other words, new tokens are generated for each store, wallet, and device the card is loaded into.
Another question that arises in this process is when are transactions tokenized? The answer comes from all payments made through digital wallets from which you can pay with the contactless system. It should be clarified that not all wallets have this technology. They can also be tokenized in wallets that allow payments with QR and in this case it must also be taken into account that not all of them are tokenized yet.
For the user, the biggest advantage is the the transparency and secrecy of their powers. Thus, if a thief were to hack and illegally obtain the token, he could only make a purchase from the device in which the card was registered, with the wallet in which it is registered and at the merchant to which the crypto number was associated. In this case, the thief should – in addition to the token – steal the mobile phone, manage to crack the passwords to access the device and the electronic wallets and only buy from the store with which the token is associated, a extremely remote device situation. In this way, This technology also protects against data leaks that sometimes come from merchants or from the theft and loss of cards.
In order to enhance security, this anti-fraud technology is increasingly being adopted around the world. “80% of banks are already tokenized and it is an industry record for Visa that there are more tokens than digital cards», rejoices Renaudo. In Argentina, he points out that 35% of transactions are contactless and that this technology has great potential for local development.
Faced with this panorama, the executive of Visa expects wallets to complete tokenization within the next six months, to enable both tokenized contactless and QR payments. This last method of payment, which is done by scanning a code, is now used in all kinds of businesses. But keep in mind that if the wallet does not accept contactless payments and is not tokenized, it means that payments made with QR through it are not protected by this new technology. Since QR interoperability (the ability that the same QR can be read by all digital wallets) only became mandatory late last year.
Those who have a long way to go according to the executive are both the majority of physical businesses that do not accept contactless payments from their payment terminalsWhat digital ones that do not accept payments through digital wallets – that is, they only authorize payment by directly entering the card data – since they have not yet joined the program and registered the cards in the Visa token vault.
In this context where the advancement of technology generates new and greater business opportunities, Visa and LA NACION present the second edition of the Innovation Prize. The distinction will be awarded on Tuesday, November 8 and will be held in the hybrid modality with face-to-face guests and they will be able to follow the event on all the platforms of lanacion.com