Banks Collaborating on Digital Payments Safety

Developing open-standard solution intended to protect customer account information

NEW YORK -- The Clearing House (TCH) has announced that it is working with the nation's leading financial institutions to develop an industry-wide dynamic credentialing solution to improve the safety and soundness of digital payments.

As a first step, TCH, which is comprised of 22 member banks, is developing a pilot program to demonstrate a solution that would foster an open standard solution that aims to enhance customer account information safeguards.

It is building the credentialing solution to help protect customer account information by reducing storage of sensitive information, such as a customer's card number, across multiple retailers, virtual wallet providers and others, TCH said. The initiative is designed to ensure that solutions in mobile and other digital payment channels scale in a consistently safe and sound manner.

"Financial institutions have always been the stewards of safe and sound payment systems," said Richard K. Davis, chairman, president and CEO of U.S. Bancorp and chairman of TCH. "As an industry, we want to do what we can to ensure that privacy and fraud protection are built into all types of digital payments."

The pilot will test customers' ability to use their mobile device to make a purchase within a mobile wallet and at the point of sale. The issuing bank will replacethe customer's actual account number with a randomly generated temporary number, or dynamic credential, for processing the transaction. This protects a customer's account information behind bank firewalls and lowers the potential for fraud in digital payments. Customer experience for payment transactions with mobile devices should not be impacted as the pilot is focused on the "behind the scenes" of a digital payment transaction.

"As the digital ecosystem evolves, broad adoption of digital payments will depend upon confidence in the security and storage of customer account information. This initiative is designed to provide important new ways to protect customer account information and increase customer confidence in the security of the payment systems," said Paul Galant, CEO of Citi Enterprise Payments.

Established in 1853, TCH is the oldest banking association and payments company in the United States. It is owned by the world's largest commercial banks, which collectively employ more than two million people and hold more than half of all U.S. deposits. The Clearing House Payments Co. LLC provides payment, clearing and settlement services to its member banks and other financial institutions, clearing almost $2 trillion daily and representing nearly half of the automated-clearing-house, funds-transfer and check-image payments made in the United States. It is a nonpartisan advocacy organization representing--through regulatory comment letters, amicus briefs, and white papers--the interests of its owner banks on a variety of systemically important banking issues.