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Tokenization – a boon for mobile payments in Asia Pacific?

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Thanks to the likes of Apple Pay, Samsung Pay and Google Wallet, 2014 was a phenomenal year for mobile payments in Asia Pacific. With the rapid proliferation of smartphones and great affinity we have for speed and convenience, we welcomed the launch of many innovative solutions such as mobile NFC transport, mobile contactless payments, and mobile NFC services across the region.

With the ubiquitous smartphone offering huge potential for reaching the masses, the natural question is – what’s next? Can I afford to forget my wallet at home and still be able to pay for my meals, shopping, transport, concerts, and much more…with a simple tap of my smartphone? Well, maybe, or maybe not – it depends on where I am!

Asia-Pacific, with its diverse economies – ranging from emerging markets to highly advanced ones – has an extremely fragmented mobile payments ecosystem. There are numerous handsets, operating systems and service providers, but no universal standard that different players can adopt, making it difficult for issuers to achieve mass-market adoption. Although mobile payments have picked up significantly in the last year or so, adoption has been limited to selected issuers, phones or providers.

This is where tokenization comes in – an increasingly popular way to enables banks and service providers to reach the broadest user base, with additional security. Simply put, tokenization replaces the payment card credentials with a substitute ‘token’ to protect the real card from misuse. These tokens can be provisioned onto a variety of mobile devices or via cloud services, covering Secure Elements, Trusted Execution Environment (TEE) and Host Card Emulation (HCE) enabled handsets. This allows consumers with any supported device to make tokenized mobile payments at Point-of-Sale (PoS) terminals (provided the technology is supported by the terminal), or via in-app purchases, with more security and ease.

These tokens can be programmed for restricted use; for example, for a maximum given amount, validity period, or for specific transactions or merchants. This way, even if there is a breach, the re-use of tokens is greatly limited. This is especially helpful when tokens are stored outside a mobile’s secure element.

Tokenization also complements EMV standards in preventing payment fraud. By periodically reloading the transaction keys for EMV payment, illegally obtained tokens can be blocked from further use.

The future of mobile payments is likely to stay divided in Asia, requiring localized strategies for major impact. But, the beauty of tokenization is that it simplifies mobile service delivery, enabling immediate card activation for a seamless mobile payment experience. With merchants and providers requiring minimal changes to their existing systems, tokenization can be a boon for wider adoption of mobile payments across Asia Pacific.

If you are interested to find out more, come and meet us at Mobile World Congress Shanghai from 15th to 17th July 2015

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