The future of payments is evolving. As CEO of The Electronic Transactions Association (ETA), I am seeing a flurry of activity around payments security technology. ETA's membership represents nearly $5 trillion in annual payments processed in the U.S. alone. Our member companies detect and deter crime everyday through security technology built to detect and prevent fraud and to insulate consumers from liability. Fraud accounts for less than six cents of every one hundred dollars spent on the payments systems – a fraction of a tenth of a percent.
Following a series of large-scale, high profile data breaches, consumers are understandably concerned about the security of their sensitive information. We are increasingly conducting our lives online, and the criminals that profit from stealing our sensitive information are following us in the cyber realm with increased sophistication. The evolving nature of cyber threats calls for a vigorous and dynamic response.
Fortunately, the payments industry is responding by creating and deploying new technologies to meet this growing threat. EMV chip technology, first developed two decades ago, is becoming a global standard for card security. EMV cards incorporate embedded microprocessor chips that provide security features improving upon the out-of-date security found on traditional magnetic stripe cards. The deployment of EMV in the U.S. is a complicated undertaking, requiring significant upgrades by merchants and financial institutions alike. ETA member companies have been ready for the transition to EMV since April 2013. Chip technology can prevent criminals from producing counterfeit credit cards, and although it wouldn't have prevented recent breaches of retailers, chip cards are an important component of necessary security upgrades.
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Another technology, tokenization, removes sensitive information from a transaction by replacing customer data with a unique identifier that cannot be mathematically reversed. As such, tokens hold great promise for preventing interception of useful data by criminals. Payments companies with the necessary information to accurately match the token to the payment card owner receive the token and he remaining numbers are generated using proprietary tokenization algorithms.
End-to-end encryption is an advanced risk management tool that helps protect the sensitive information transmitted over systems that may not have traditionally been encrypted. With end-to-end encryption, credit card data is encrypted from the moment the card is swiped, while the data is in transit, all the way to authorization. This technology minimizes opportunities for hackers and criminals to access data during purchase.
Lastly, using a mobile device to initiate a transaction will soon be as common as swiping a card. Mobile payments and digital wallet cloud technology are actively employing new securities. Mobile devices provide enhanced capabilities, including passcode protection and secure chip technology, as well as both device and cloud based encryption and tokenization capabilities.
The payments industry is creating innovations today to solve tomorrow's security threats. This protection ensures the free flow of information vital to helping consumers access and use electronic payments, promotes price competition and ensures the free flow of commerce.
Jason Oxman is the CEO of the Electronic Transactions Association, an international trade association representing more than 500 companies worldwide. Follow ETA on Twitter @ElecTranAssoc
