American Express has launched a new service, which looks to swap payment card numbers with unique tokens, reports Network World.
Shopping websites as well as digital wallets that support the digital tokens won't have to store any card details, instead using unique tokens that are mapped directly to the card's account.
Because the tokens can be linked to individual devices, retailers or transaction type, the risk of fraud is massively reduced. What's more, tokens can be quickly revoked and replaced without having to cancel and re-issue the card that they correspond to.
Network World states that these specific measure means that "widespread adoption of tokenization for card-not-present transactions would likely reduce fraud."
The tokens are spent using mobile app for online purchases, or via Near Field Communications for in-store purchases. Threat Post draws similarities between the token system and encryption, but states that "tokenization doesn't carry the same expense and complexity encryption does."
Paul Fabara, President of Global Banking and Global Network Business at American Express said, “We believe our payments network is a tremendous asset to American Express – one that will allow us to offer our customers new features and technologies to meet their evolving spending needs. As we move ahead, we are excited to bring these new capabilities to our customers and look forward to continuing to serve them.”
The service is already available in the United States, and will be rolled out to other countries next year, the company said. The move comes just under a year ahead of the phase-out of 'swipe and sign' credit cards, which will be replaced with chip-and-pin across America in October 2015.
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