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Alliance advocates concurrent use of smart chip, encryption, tokenization

A new paper from the Smart Card Alliance says payments providers can help protect themselves against fraud by using layered technologies.

October 28, 2014

Businesses processing credit and debit payments can help protect themselves against new and evolving fraud threats by implementing EMV chip technology, tokenization and encryption security technologies concurrently, according to a new Smart Card Alliance Payments Council publication.

The white paper, "Technologies for Payment Fraud Prevention: EMV, Encryption and Tokenization," is available for free download.

The paper aims to help stakeholders determine their best approach to card security, according to Smart Card Alliance Executive Director Randy Vanderhoof:

Today, payments industry stakeholders are looking at many security technologies to protect their businesses and customers. This white paper explains how layering three of these technologies — chip, tokenization and encryption — in conjunction can help to secure the payments infrastructure and prevent card fraud. The degree of layering will differ among payments stakeholders depending on their requirements, environment and budget. Reading this white paper is a good start for any stakeholder starting to consider their best approach for implementing the three technologies.

The three technologies are:

chip — provides cryptographic card authentication that helps protect against the acceptance of counterfeit cards, as well as cardholder verification and several means of transaction authentication;
encryption — includes end-to-end or point-to-point encryption, which encrypts card data upon card swipe, key entry, tap or insertion so that no one else can read it; and
tokenization — replaces card data with surrogate values that are unusable by outsiders and have no value outside of a specific merchant or acceptance channel.

The white paper also explains the inner workings of each technology, including:

the authorization process for chip payments and the value of chip to issuers and merchants;
different implementations of transaction encryption;
the complementary role of tokenization with respect to chip and encryption, as well as the issuance process and standardization initiatives; and

The document concludes with a discussion of the benefits of implementing the three technologies together in order to secure the payments infrastructure and prevent payment fraud.

Contributors involved in the development and review of the publication include: Accenture; American Express; Bell ID; CH2M Hill; Chase Card Services; CPI Card Group; Datacard Group; First Data Corp.; Fiserv; Gemalto; Giesecke & Devrient; Heartland Payment Systems; Ingenico; Inside Secure; MasterCard; NXP Semiconductors; Oberthur Technologies; Shazam; Tyfone; Valid USA; Vantiv; Visa Inc.; Washington Metropolitan Area Transit Authority; and Wells Fargo.