The MasterCard Digital Enablement Service (MDES) will begin providing its tokenization services to Synchrony Financial. This means that brands like JCPenney can give customers the ability to use their private label credit cards on Apple Pay.
When Apple announced Apple Pay in 2014, it focused on allowing users to connect their bank and credit cards to the system, which meant easier checkout at many retailers. Retailer credit accounts were also cut, even though many shoppers rely on them for loyalty programs. But now, MasterCard has offered a way to both protect shopper information and allow for the use of private label cards on Apple Pay.
“What we’re doing is enabling merchants like JCPenney to offer an enhanced shopping experience to their customers and in turn, encouraging both repeat business and customer loyalty,” says Ed McLaughlin, chief emerging payments officer at MasterCard. “From our perspective, we’re focused on making sure that any connected device can be used to make purchases, and that we’re able to deliver the simplicity, security and convenience people have become accustomed to.”
Tokenization is a process that encrypts data and allows Apple Pay to store user information without storing account numbers, says MasterCard. When you load a new card onto your smartphone, your 16-digit account number is replaced with an alternative number, or token, that has no monetary value.
The encryption process provides an additional layer of security, eliminating the need for merchants and digital wallet operators to store account numbers. These tokens ensure that links between the device and the account can be quickly broken in the event that the token is manipulated or the device is stolen. If the token is compromised, MDES will block any fraudulent transactions.
“This provides a better customer experience whereby in the event a device is lost or a plastic card is compromised, we can break the link in MDES between the tokens and the card and reissue the token or the card without disrupting the consumer,” McLaughlin says.
Since private label cards are often associated with special offers and discounts, it stands to reason that simplifying their use with Apple Pay could mean both wider adoption of mobile payments and greater incentive for consumers to use them.
“The expansion of Apple Pay to private label cards will help merchants like JCPenney to expand their existing loyalty programs, benefits and rewards to customers,” McLaughlin says. “Our goal is to help merchants capitalize on mobile payments, ensure the best possible consumer experience for their consumers and encourage both repeat business and customer loyalty.”
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