The Future of Payments

63 BANKING PERSPECTIVES QUARTER 4 2018 By reducing the risk of fraud related to digital payments, tokenization makes online checkout, mobile contactless payments, and in-app purchases more secure. As Citi’s proprietary digital offerings continue to expand and we increasingly offer our services on different platforms, using tokenization to remove credit card information from the payments ecosystem is another way we are safeguarding the security of our customers’ data, which is a critical piece of our business. At music and other entertainment events, Citi has been using cashless payments made possible by tokenization for several years. Radio-frequency identification chips are now embedded into ticket wristbands and used for identification, payment, security, and fan engagement. We’ve seen usage of these payments increase significantly year-over-year as the general public embraces the technology and the ease of use it provides. For example, during the Governors Ball Music Festival in New York City in 2018, we saw a 170% increase in cashless spending versus the year before. As a brand, Citi is continuously aiming to enable our customers to spend less time banking and more time enjoying life’s key moments. Through an all-in-platform that enables cashless payments as well as other powerful capabilities, our customers are able to enjoy what matters most to them and Citi is that enabler. Citi continuously works with the credit card network partners to drive adoption of tokens. Our own digital wallet, Citi Pay Masterpass, is available to Citi Mastercard customers in the U.S., Singapore, Australia, and Mexico. Mastercard and Visa have had a reciprocal agreement to allow access to the other network’s tokens through their digital wallets for two years. Earlier this year, Mastercard and Visa announced that they’re exploring plans to adopt a single shared payment button for online payments. American Express and Discover are also considering the project, which would streamline the online checkout process for customers and the system for merchants. Merchants are seeing the benefits as well. Using tokenization facilitates more secure transactions, faster checkout experiences, new payment options, and additional ways to sell. Tokens can be used as the merchant needs, without security concerns. Tokens are flexible for refunds, chargebacks, and recurring payments while providing end- to-end security, low cost per transaction, and a format that fits with legacy credit card fields. Tokenization allows merchants to reduce their regulatory obligations and costs associated with meeting Payment Card Industry Data Security Standard (PCI DSS) compliance for storing credit card information. Tokenization minimizes the scope of PCI compliance by reducing the number of systems that have access to customers’ credit card credentials. In 2011, the Payment Card Industry Security Standards Council (PCI SSC), the organization responsible for enforcing PCI DSS, issued guidelines on tokenization. It recommended tokenization be used to supplement, not replace, the data security standards. While this guidance has yet to be added to the official PCI DSS, Qualified Security Assessors accept tokenization as a viable solution to meet requirements under the standard. CONCLUSION In Citi’s quest to become our customers’ always-on financial partner, we are looking to deliver simpler, better, faster, and consistently excellent experiences across channels that fit seamlessly into their lives. As our customers continue to adopt digital payment offerings, tokenization plays a key part to increase convenience and provide a frictionless, simple experience. We know the concept of what makes a “bank” is changing. Whatever shape the future takes, new technologies cannot be ignored – nor can we hesitate when faced with new customer demands. Citi is embracing the opportunity and responsibility to use the power of new technologies to benefit our customers across the globe. n ENDNOTE 1 https://www.juniperresearch.com/press/press-releases/apple- pay-accounts-for-1-in-2-oem-pay-users