Wednesday, October 16, 2019
Local Tokenization Depends upon Foreign Tech
Simple Payments
Local Tokenization Depends upon Foreign Tech
  • By Cho Jin-young
  • December 8, 2014, 01:47
Share articles

Tokenization is a process by which a device such as a smartphone verifies that it holds a credit card number without sending the number itself, but sending the token.
Tokenization is a process by which a device such as a smartphone verifies that it holds a credit card number without sending the number itself, but sending the token.

 

As the simple payment market is rapidly growing, there is increasing attention towards a payment card technology called tokenization, which makes it possible to safely store and manage 16-digit credit card numbers. Since most local credit card companies technically depend on foreign companies such as MasterCard, a growing number of people in the industry are pointing out that it is urgent for the industry to develop a leading technology.

According to sources in the financial industry on Dec. 4, no credit card company in Korea is currently engaged in the research and development of tokenization. Some companies like Shinhan Card and BC Card can currently deliver a somewhat similar technology that creates virtual card numbers. Most of them, including KB Kookmin Card, NH Nonghyup Card, and Citibank, provide virtual card number services for overseas online payments, based on the tokenization method of MasterCard.

Experts are saying that local credit card companies should try hard to develop their own version of tokenization. Foreign companies like Visa and MasterCard have already taken the initiative in research and development, suggesting different types of international standards. In fact, EMVCo and the PCI Security Standards Council, which was formed by American Express, Discover Financial Services, JCB International, MasterCard, and Visa, continue to develop tokenization standards.

Based on this technology, Apple unveiled mobile payment and digital wallet service Apple Pay. The use of tokenization will guarantee more advanced security and efficiency than the existing method that creates virtual credit card numbers used by local credit card companies. Since it uses randomized 16-digit credit card numbers, tokenization is more convenient than the one-off payment method using virtual credit card numbers. In addition, the system can only be used in specific incidents and places. Hence, it is virtually impossible to be utilized in the event of an information leakage accident.