David Worthington, VP, Business Development, Bell ID
Whether it is EMV, NFC, HCE or TSP, there is certainly no shortage of acronyms within the payments ecosystem. And this is one trend that is here to stay.
The recent release of EMVCo’s updated payment tokenization specification has added yet another into the mix – Payment Account Reference (PAR). But what is PAR, why has it been introduced and what does it mean for the payments industry?
What is PAR?
According to EMVCo, PAR is a ‘newly-defined data element that reduces reliance on primary account numbers (PAN) when managing security requirements and delivering value-added services.’ It has been introduced solely to support the process of payment tokenization.
Why has PAR been introduced?
Tokenization reduces the value of stored payment credentials by replacing them with a ‘token’. The token is a different number to the customer’s PAN, but with the same format, and can only be mapped to the original PAN by trusted parties.
Although this increases security, it also presents challenges. Consumers may pay using a payment card, or via any tokens such as the various ‘Smartphone Pays’, card-on-file e-commerce and other platforms, that can be related to that one card. This results in a single PAN being linked to several tokens across different payment instruments and channels. As only the token service provider (TSP)can see the relationship between the original PAN and all of its related tokens, this can make it difficult for other entities down the chain to gain an aggregated view of the transactions performed by the original credential.
As a consequence, their ability to deliver value-added services such as loyalty and couponing, and in some cases manage regulatory requirements or provide transaction risk scoring, is impacted. This is because these functions often rely on the ability to identify transactions at the aggregate PAN level to enable monitoring and analysis of consumer behaviour.
EMVCo asserts that the introduction of PAR addresses this issue as it allows PAN-based and related token-based transactions to be linked together, and enables the payments acceptance community to perform these functions consistently while maintaining security.
What does PAR mean for the payments industry?
Although the idea underpinning PAR makes sense, industry feedback has been mixed so far. So, what does PAR really mean for the payments community and why is there industry hesitation?
One thing is for sure, implementing PAR is not going to be an easy ride.
Firstly, PAR as a new and additional data element will need to be integrated into all authorization and clearing messaging.
PAR has a different length and format to the PAN, so merchants and acquirers will have to upgrade their back end systems to support and identify this new data element as the new index for merchant loyalty and acquirer risk management.
In addition, merchants will have to hold lookup tables to link a PAR with the original PAN and all of the various tokens that are associated with it. In practice, this means that merchants will hold data that maps the activity taking place within the token vault. In the specification’s current format, this raises various regulatory and compliance issues regarding the management and protection of data.
Further complexity is introduced by the fact that EMVCo has updated the underlying EMV Specifications to introduce new ‘tags’ supporting PAR for all EMV cards and terminals, as well as the ‘OEM Pay’ solutions and mobile applications.
The consequences of this update are profound, as this may require a complete recertification process across the entire payments industry. For those in the United States who are currently involved in a complex and drawn-out certification process following the EMV liability shift in October 2015, the thought of recertification is a painful one.
Such complexity is naturally accompanied by high costs.
As PAR has been introduced to benefit merchants and acquirers, they will be expected to absorb the majority of the implementation costs. The key question, therefore, is whether the potential benefits justify the investment. In contrast, the issuer and processor community is set to gain little or no benefit from PAR, so any costs they face will be somewhat hard to swallow. As alternative options to PAR exist that also enable actors to deliver value-added services and regulatory requirements, there is a lot of work to do to convince the industry that the return on investment is sufficient.
An uncertain future
It is not easy to introduce a brand new data element into the payments ecosystem. With applications to be recertified and system updates to be made, it will be many years until PAR is fully implemented across the entire payments industry. And if the industry feels compelled to drag its feet due to the lack of commercial imperatives, this process will be further elongated. More information is required, therefore, on the expected implementation timelines.
So, what does PAR mean for the payments industry? At present, the simple answer is that nobody is quite sure. More information on the benefits of PAR, as well as the compliance and regulatory issues that it has the potential to create across the entire payment ecosystem, is required. With such a wide-scale impact, you can expect to hear much more about PAR over the coming months.
To find out more about tokenization as a technology and its use for the protection of payment card data, download Bell ID’s free white paper and watch the video.
Oil rises as vaccine and U.S. stimulus boost demand outlook
By Laila Kearney
NEW YORK (Reuters) – Oil prices were up on Monday on rising optimism about COVID-19 vaccinations, a U.S. economic stimulus package and growing factory activity in Europe despite coronavirus restrictions.
Signs that Chinese oil demand is slowing kept prices from moving higher.
Brent crude rose 51 cents, or 0.8%, at $64.93 a barrel by 11:29 a.m. EST (1629 GMT), and U.S. West Texas Intermediate (WTI) crude gained 28 cents, or 0.5%, to $61.78 a barrel.
Both contracts finished February 18% higher.
“The three major supportive factors are the prevalent vaccine rollouts, the optimism about economic growth and the view that the oil balance will get tighter as a result of the first two points,” PVM Oil Associates analyst Tamas Varga said.
Support also came from a $1.9 trillion coronavirus-related relief package passed by the U.S. House of Representatives on Saturday.
If approved by the Senate, the stimulus package would pay for vaccines and medical supplies, and send a new round of emergency financial aid to households and small businesses, which will have a direct impact on energy demand.
The approval of Johnson & Johnson’s COVID-19 shot also buoyed the economic outlook.
Manufacturing data from around the world was mixed.
China’s factory activity growth slipped to a nine-month low in February, sounding alarms over Chinese crude buying and pressuring oil prices.
“One negative is more and more talk about Chinese oil demand maybe faltering, that they bought all the oil that they’re going to need for a while,” said Phil Flynn, senior analyst at Price Futures Group in Chicago. “There’s some talk that their strategic reserves are filled up and so some people are betting against the Chinese continuing to drive oil prices.”
German activity, on the other hand, hit its highest level in more than three years and Euro zone factory activity raced along, driven by rising demand.
OPEC oil output fell in February as a voluntary cut by Saudi Arabia added to agreed reductions under a pact with allies, a Reuters survey found, ending a run of seven consecutive monthly increases.
The Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, meet on Thursday and could discuss allowing as much as 1.5 million barrels per day of crude back into the market.
(Additional reporting by Bozorgmehr Sharafedin in London, Jessica Jaganathan and Florence Tan in Singapore; Editing by Jason Neely, Edmund Blair, Barbara Lewis, David Evans and Will Dunham)
EU auditors warn over 5 billion euro emergency Brexit spending
BRUSSELS (Reuters) – The European Union lacks tight oversight of 5 billion euros in emergency Brexit aid, the bloc’s auditors said on Monday, warning over governance risks regarding quick cash injections as Brussels prepares to disburse massive amounts of COVID-19-related stimulus.
The European Court of Auditors (ECA) said member states are due to get 4 billion euros, or most of the funding from the so-called Brexit Adjustment Reserve this year, without the usual requirement to agree with the bloc’s executive in advance what exactly they plan to spend it on.
“We therefore raise concerns that this proposed timing and structure creates a lack of certainty where member states may choose suboptimal or ineligible measures,” said Tony Murphy, a member of the ECA, an agency set up to ensure EU funds are spent properly.
Murphy said EU countries would only report on their completed spending in September 2023 and would need to pay back money that would not be deemed eligible.
“We would like to see changes,” to improve financial management and ensure the overall effectiveness of the Brexit emergency fund, Murphy said, though he said the ECA realised those most affected by Brexit needed the money swiftly.
Based on the size of trade ties with now-departed Britain and the share of fish catch in UK waters, Ireland is due to get a quarter of the Brexit emergency allocation, followed by the Netherlands, Germany and France.
As the EU moved from a protracted Brexit crisis to grappling with the coronavirus pandemic, last year it designed another unprecedented spending plan – economic stimulus worth 750 billion euros to pull member states out of a record recession.
While EU countries need to pre-agree with the Brussels-based European Commission their spending plans to receive recovery money, Murphy said trade-offs between swift and diligent spending were on the auditors’ minds.
“What we’d be striving at is a good balance between flexibility and appropriate control structures,” he said. “They are emergency measures, we can’t wait around for years for the plans to be drafted. It’s a matter of getting the balance right.”
(Reporting by Gabriela Baczynska; Editing by Hugh Lawson)
Egypt wants to register millions of gig workers for state insurance, aid
By Menna A. Farouk
CAIRO (Thomson Reuters Foundation) – Egypt will start registering millions of gig workers in order to offer them health insurance and emergency state aid during the coronavirus pandemic, which has taken a particularly heavy toll on the nation’s ad-hoc employees, officials said.
There are at least 14 million gig workers in Egypt, and while some workers and campaigners welcomed the government’s drive, others warned that many workers could be reluctant to sign up – fearing tax and social security payment demands.
The government said it plans to identify and support 2 million gig workers in the country of 100 million people by the end of this year, labour ministry spokesman Haitham Saad El-Din said on Saturday.
“It is part of a government plan to give assistance to this segment of the society which has been majorly affected by the pandemic,” he said, adding that officials were focusing first on identifying casual construction labourers.
Gig workers who have their employment status registered on their national identity cards under a new “irregular employment” category will be given free social security insurance and be eligible for state welfare programmes.
Egypt’s state-run insurance plan includes life insurance and disability cover, as well as covering healthcare costs.
The announcement is the latest in a series of government measures aimed at shielding vulnerable groups from the economic fallout of the pandemic.
Soon after the coronavirus outbreak began, it launched a programme that supports irregular workers with monthly aid, and Egyptian President Abdel Fattah el-Sisi called for financial support to be boosted when a second virus wave took hold.
State welfare spending surged 36% in the first half of the current fiscal year, Finance Minister Mohamed Maait said recently.
ON THE BOOKS
Some daily labourers hailed the registration drive as a positive step, saying it would help bring them into the formal economy and recognise their economic contribution.
“Millions of Egyptians have been affected by this pandemic but it’s really good that the government is not leaving us behind,” said Farouk Mahmoud, 35, a temporary worker from the city of Sohag.
Still, while the latest data puts the number of gig workers at 14 million, the real number may be much higher – making registering them a daunting administrative task, said Bassant Fahmi, a member of parliament’s economic affairs committee.
Some workers may also be wary about being on the books.
“Many of them may fear being asked afterwards to pay taxes or insurance. That could mean a lot of gig workers avoiding being identified by the government,” she told the Thomson Reuters Foundation.
But besides any misgivings about being under the government’s radar, many gig workers in Egypt are more concerned about the dearth of permanent job opportunities – especially for young people – and the health of the wider economy.
“It isn’t crucial for me to have a job on my ID,” said Abanoub Lotfi, a 26-year-old driver for ride-hailing service Uber, who has a degree in commerce.
“What really matters is that the government offers me a stable job that suits my academic background and helps me afford my needs and those of my family.”
(Reporting by Menna A. Farouk; Editing by Helen Popper; Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers the lives of people around the world who struggle to live freely or fairly. Visit http://news.trust.org)
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