This Visa press release identifies 20 new gateway and acquirer partners that have agreed to deploy Visa Token Service for credential-on-file (COF but also referred to as card on file by most) used by merchants. Unlike other token services that target issuers provisioning a mobile handset this token service is designed to help merchants remove card data from the merchant environment by replacing it with tokens:
“SAN FRANCISCO–(BUSINESS WIRE)–Visa Inc. (NYSE:V) today announced the commercial expansion of the Visa Token Service for credential-on-file (COF) token requestors, marking a major milestone towards further securing consumer payments in the digital channel.
“Adyen is excited to be the first acquirer in the payments ecosystem with in-market solutions to support and offer Visa Token Service to our global merchants”
With this expansion, acquirer gateway and technology partners Adyen, AsiaPay, Braintree, Checkout.com, Cherri Tech, CyberSource, Elavon, Ezidebit, eWAY, Fit-Pay, Giesecke & Devrient, PayPal, Payscout, Rambus,SafeCharge, SecureCo, Square, Stripe, Worldpay and YellowPepper are or will soon be able to tokenize credential-on-file digital payments on behalf of their merchant and payment clients.”
While this service can help small and medium size merchants that may still be wrestling with the PCI requirements for protecting card data, it is unlikely to attract most large merchants that have already addressed PCI using encryption and/or tokenization solutions such as those available from First Data (TransArmor), Worldpay (Incryptify), and others.
It is unclear what this service costs or if that cost is locked in for any specific period of time. The use of card on file by merchants is growing as merchants take the lead in implementing mobile apps that deliver real convenience and value to consumers. These apps drive purchases and payments providing meaningful consumer services such as mobile order ahead and loyalty solutions.
This advantage that merchants have in driving mobile usage and payments appears to be spilling over into voice initiated payments made via Google Assistant and Alexa. The payment networks are surely trying to identify a strategy that will promote their one-click solutions (Checkout and Masterpass) over card on file solutions but it is unclear if this initiative by Visa would play a part in any such strategy. This is of course speculative but what is clear is that the networks are watching merchants take the lead and that card on file could perhaps be too easily converted to a direct debit transaction or a faster payment transaction that is not controlled by the networks.
Overview by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group