Banks and financial institutions will prefer tokenization because it is safe.
According to Bank Innovation, Apple will reportedly use tokenization technology on its new iPhones and iWatch. As you know, tokenization replaces credit/debit card details such as account numbers with codes that are transmittable between supported devices. In Apple's case, it will be NFC, as reported last week.
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If true, banks and financial institutions will prefer tokenization because it is safe. Codes can only be used once, and if hackers intercepted any of them, they are no longer useful.
Brad Greene, vice president of digital solutions at VISA, told Bank Innovation that "tokens provide innovators with flexible, purposed, and driven credentials in their customers’ experiences instead of actual data." This way, if "tokens are intercepted by an attacker, they would be worthless or greatly diminish,” he added.
Bank Innovation was also able to confirm that some Apple Stores and retail partners are already supporting NFC. Sources said that the Verifone MX 915 POS terminal will be used to support tokenization. If the report is true, Apple will indeed separate itself from competitors. Apple could also rely on tokenization to develop real-life applications, says James Wester of IDC Research.
Source: Bank Innovation