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What is card-on-file EMV payment tokenization?

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What is card-on-file EMV payment tokenization?

André Stoorvogel, Director, Product Marketing, Payments at Rambus

The way we pay is changing. Consumers are now using their PC, smartphones, wearable devices and even cars to buy goods and services.

The size and value of the card-not-present (CNP) market is increasing exponentially as payment use-cases across e-commerce, m-commerce and the Internet of Things (IoT) emerge and mature.

What is card-on-file?

The process of collecting and storing payment credentials for future use, known as card-on-file, is fundamental to the remote commerce ecosystem.

The use of card-on-file can be divided into various channels such as recurring payments, one-click ordering, in-app payments and IoT payments.

The cost of convenience?

Although payment methods utilizing card-on-file offer convenience, they also create challenges. CNP fraud continues to surge worldwide, and is set to hit $7.2 billion by 2020.

Merchants must therefore contend with a growing threat of card-on-file databases being compromised and the credentials being used fraudulently.

Combatting Card Not Present fraud – a false economy

To combat this rise in CNP fraud, merchants can deploy various technologies and techniques such as 3-D Secure, validation services, historical data, real-time monitoring and analytics, and manual screening.

Advances are undoubtedly being made to make these security techniques more intelligent and improve risk decisioning, but it is apparent that there is work still to be done. Unnecessary false transaction declines are outstripping the amount of actual fraud 13 times over, meaning retailers are losing a total of $8.6 billion per year due to false declines compared to the $6.5 billion of fraud they are actually preventing.

Merchants, who are in a constant battle against cart abandonment, must also ensure that additional security measures do not compromise the user experience.

Introducing card-on-file EMV® payment tokenization

Security approaches that decrease the sensitivity of the underlying payment credential can fight fraud, without compromising the user journey.

EMV payment tokenization describes the process of replacing a primary account number (PAN) with a unique payment token that is restricted in its usage, for example, to a specific device, merchant, transaction type or channel.

Importantly, tokens can move through the transaction flow in the same way as the original PAN, meaning merchants can strike an effective balance between high security and a frictionless buying experience.

Enhancing security with EMV payment tokenization

With card-on-file EMV payment tokenization, the merchant only stores payment tokens in their database rather than the actual card number. This delivers various security benefits to the digital commerce ecosystem by reducing the risk and mitigating the impact of malware, phishing attacks and data breaches. Better fraud prevention will have a tangible impact on both consumers and merchants.

Benefits beyond security

Crucially, card-on-file EMV payment tokenization offers much more than simply enhancing security. It can significantly increase convenience for consumers and create efficiencies for merchants.

Card-on-file tokenization systems enable consumer payment details to be instantly refreshed when a card is lost, stolen or expires. It means there is no need for a consumer to login to an online shopping account to update their details, or to miss out on a subscription due to redundant card credentials.

Merchants too can benefit from increased convenience. For example, it helps to reduce the regulatory burden and costs associated with ensuring PCI DSS compliance for stored card credentials.

Value for all

EMV payment tokenization can significantly enhance the security of card-on-file payment methods, while increasing convenience and simplifying the user experience. This brings huge value to the digital payments space, so we can expect to see growing momentum for the technology in the coming months and years.

Rambus’ Token Gateway for E-Commerce solution is one of the first to be qualified under the “Visa Ready” program. This enables token requestors like online merchants, payment service providers and acquirers globally to quickly and securely connect to the Visa Token Service to tokenize card-on-file e-commerce transactions.

Interested in learning more about the benefits of a Token Gateway? Download the eBook now.

Finance

Sunak warns of bill to be paid to tackle Britain’s ‘exposed’ finances – FT

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Sunak warns of bill to be paid to tackle Britain's 'exposed' finances - FT 1

(Reuters) – British finance minister Rishi Sunak will use the budget next week to level with the public over the “enormous strains” in the country’s finances, warning that a bill will have to be paid after further coronavirus support, according to an interview with the Financial Times.

Sunak told the newspaper there was an immediate need to spend more to protect jobs as the UK emerged from COVID-19, but warned that Britain’s finances were now “exposed.”

UK exposure to a rise of one percentage point across all interest rates was 25 billion pounds ($34.83 billion) a year to the government’s cost of servicing its debt, Sunak told FT.

“That (is) why I talk about leveling with people about the public finances (challenges) and our plans to address them,” he said.

The government has already spent more than 280 billion pounds in coronavirus relief and tax cuts this year, and his March 3 budget will likely include a new round of spending to prop up the economy during what he hopes will be the last phase of lockdown.

He is also expected to announce a new mortgage scheme targeted at people with small deposits, the UK’s Treasury announced late on Friday.

Additionally, the government will also announce a new 100 million pound task force to crack-down on COVID-19 fraudsters exploiting government support schemes, it said.

(Reporting by Bhargav Acharya in Bengaluru; Editing by Leslie Adler and Cynthia Osterman)

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G20 promises no let-up in stimulus, sees tax deal by summer

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G20 promises no let-up in stimulus, sees tax deal by summer 2

By Gavin Jones and Jan Strupczewski

ROME/BRUSSELS (Reuters) – The world’s financial leaders agreed on Friday to maintain expansionary policies to help economies survive the effects of COVID-19, and committed to a more multilateral approach to the twin coronavirus and economic crises.

The Italian presidency of the G20 group of the world’s top economies said the gathering of finance chiefs had pledged to work more closely to accelerate a still fragile and uneven recovery.

“We agreed that any premature withdrawal of fiscal and monetary support should be avoided,” Daniele Franco, Italy’s finance minister, told a news conference after the videolinked meeting held by the G20 finance ministers and central bankers.

The United States is readying $1.9 trillion in fiscal stimulus and the European Union has already put together more than 3 trillion euros ($3.63 trillion) to keep its economies through lockdowns.

But despite the large sums, problems with the global rollout of vaccines and the emergence of new coronavirus variants mean the future path of the recovery remains uncertain.

The G20 is “committed to scaling up international coordination to tackle current global challenges by adopting a stronger multilateral approach and focusing on a set of core priorities,” the Italian presidency said in a statement.

The meeting was the first since Joe Biden – who pledged to rebuild U.S. cooperation in international bodies – U.S. president, and significant progress appeared to have been made on the thorny issue of taxation of multinational companies, particularly web giants like Google, Amazon and Facebook.

U.S. Treasury Secretary Janet Yellen told the G20 Washington had dropped the Trump administration’s proposal to let some companies opt out of new global digital tax rules, raising hopes for an agreement by summer.

“GIANT STEP FORWARD”

The move was hailed as a major breakthrough by Germany’s Finance Minister Olaf Scholz and his French counterpart Bruno Le Maire.

Scholz said Yellen told the G20 officials that Washington also planned to reform U.S. minimum tax regulations in line with an OECD proposal for a global effective minimum tax.

“This is a giant step forward,” Scholz said.

Italy’s Franco said the new U.S. stance should pave the way to an overarching deal on taxation of multinationals at a G20 meeting of finance chiefs in Venice in July.

The G20 also discussed how to help the world’s poorest countries, whose economies are being disproportionately hit by the crisis.

On this front there was broad support for boosting the capital of the International Monetary Fund to help it provide more loans, but no concrete numbers were proposed.

To give itself more firepower, the Fund proposed last year to increase its war chest by $500 billion in the IMF’s own currency called the Special Drawing Rights (SDR), but the idea was blocked by Trump.

“There was no discussion on specific amounts of SDRs,” Franco said, adding that the issue would be looked at again on the basis of a proposal prepared by the IMF for April.

While the IMF sees the U.S. economy returning to pre-crisis levels at the end of this year, it may take Europe until the middle of 2022 to reach that point.

The recovery is fragile elsewhere too. Factory activity in China grew at the slowest pace in five months in January, and in Japan fourth quarter growth slowed from the previous quarter.

Some countries had expressed hopes the G20 may extend a suspension of debt servicing costs for the poorest countries beyond June, but no decision was taken.

The issue will be discussed at the next meeting, Franco said.

(Additional reporting by Andrea Shalal in Washington Michael Nienaber in Berlin and Crispian Balmer in Rome; editing by John Stonestreet)

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Bank of England’s Haldane says inflation “tiger” is prowling

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Bank of England's Haldane says inflation "tiger" is prowling 3

By Andy Bruce and David Milliken

LONDON (Reuters) – Bank of England Chief Economist Andy Haldane warned on Friday that an inflationary “tiger” had woken up and could prove difficult to tame as the economy recovers from the COVID-19 pandemic, potentially requiring the BoE to take action.

In a clear break from other members of the Monetary Policy Committee (MPC) who are more relaxed about the outlook for consumer prices, Haldane called inflation a “tiger (that) has been stirred by the extraordinary events and policy actions of the past 12 months”.

“People are right to caution about the risks of central banks acting too conservatively by tightening policy prematurely,” Haldane said in a speech published online. “But, for me, the greater risk at present is of central bank complacency allowing the inflationary (big) cat out of the bag.”

Haldane’s comments prompted British government bond prices to fall to their lowest level in almost a year and sterling to rise as he warned that investors may not be adequately positioned for the risk of higher inflation or BoE rates.

“There is a tangible risk inflation proves more difficult to tame, requiring monetary policymakers to act more assertively than is currently priced into financial markets,” Haldane said.

He pointed to the BoE’s latest estimate of slack in Britain’s economy, which was much smaller and likely to be less persistent than after the 2008 financial crisis, leaving less room for the economy to grow before generating price pressures.

Haldane also cited a glut of savings built by businesses and households during the pandemic that could be unleashed in the form of higher spending, as well as the government’s extensive fiscal response to the pandemic and other factors.

Disinflationary forces could return if risks from COVID-19 or other sources proved more persistent than expected, he said.

But in Haldane’s judgement, inflation risked overshooting the BoE’s 2% target for a sustained period – in contrast to its official forecasts published early this month that showed only a very small overshoot in 2022 and early 2023.

Haldane’s comments put him at the most hawkish end among the nine members of the MPC.

Deputy Governor Dave Ramsden on Friday said risks to UK inflation were broadly balanced.

“I see inflation expectations – whatever measure you look at – well anchored,” Ramsden said following a speech given online, echoing comments from fellow deputy governor Ben Broadbent on Wednesday.

(Editing by Larry King and John Stonestreet)

 

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