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Visa Europe Plans Credit Card Cloaking That Could Pave Way for Apple Pay

Visa Europe Plans Credit Card-Cloaking That Could Pave Way for Apple Pay

By Reuters | Updated: 24 February 2015 15:23 IST

Visa Europe has announced a new, more secure way for consumers to pay retailers via smartphones, a move that could set the stage for Apple's Apple Pay and rival payment services to be introduced into Europe in the coming months.

Visa Europe said on Tuesday it would introduce to member banks by mid-April a "tokenisation" service, a technique which substitutes random numbers for a user's credit card number when a merchant transmits transaction data, reducing the risk of online theft.

New token-based security from Visa Inc, the former parent of Visa Europe, and rival card issuers MasterCard and American Express was considered by many experts to be a critical security enabler when Apple Pay was introduced in the United States last year.

The announcement is just one of several new payment services the London-based credit card giant is unveiling. These include a way for card customers to send money overseas to other Visa users via their social media profiles on sites such as Facebook, WhatsApp, Twitter or LinkedIn.

Visa Inc, now a partner of Visa Europe, announced its own tokenisation service that went live in September, the same month as Apple introduced Apple Pay in the United States. In October, Apple Pay was released with support from top U.S. banks, card issuers but resistance from some major U.S. retailers.

Steve Perry, Visa Europe's chief digital officer, said in an interview his association's plan for secure credit card data transmission parallels what Visa Inc offers in the United States. But he declined to comment on whether Apple Pay had agreed to use his organisation's version in European markets.

"Apple and Visa (Inc) have an agreement around what has happened," Perry said. "I am as excited as anyone, but we have to wait," he said. The Visa Europe executive referred further questions to Apple.

An Apple spokesman was not immediately available to comment on any international expansion plans it might have.

The move is part of broader efforts by Visa Europe to retain its central role in a fast-moving payments landscape now being challenged by major technology companies such as Apple, Google and eBay's PayPal, as well as hundreds of ambitious financial technology start-ups.

Its plans include opening a mobile app store for its member banks to pick and choose payment services that they can assemble into mobile banking services they offer their own customers.

Visa Europe, which since 2007 has operated independently of Visa Inc, is a cooperative of more than 3,700 European banks with more than 500 million cards in circulation.

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