VISA CEO CONFIRMS TOKENS AS NEW NETWORK REVENUE STREAM

Visa CEO Charles Scharf on Wednesday (Nov. 12) said that not only is tokenization ‘the single biggest change that’s been made in the payment networks easily over the past 15 or 20 years and maybe longer,’ but he spoke about how it enables Visa to control the data and to potentially charge a lot more for it.
‘Tokenization has opened up this whole world for us to be able to use digital devices to be a meaningful part of the payments flow in a way that (those payments) wouldn’t have in the past,’ Scharf told attendees at the Bank of America Merrill Lynch 2014 Banking & Financial Services Conference. ‘Those of us that participate in the token infrastructure can make decisions on who you want to give access to, whether you want to charge for it and things like that. So it’s hugely meaningful to our ability to open up new channels and to make sure there’s clarity in terms of who controls the payment information. We put a rate schedule out there for tokenization. We said we’re waving everything through the end of 2015. We want people to adopt tokenization. We think it thus creates a meaningful set of opportunities that would be difficult for us to participate without something like tokenization.’
The Visa CEO said the specifics of post-2015 token pricing are still being decided. ‘Down the line, if we specifically monetize it as a service or we participate in the broader volume set and it helps justify the price that’s out there today, that’s a decision we’ll make as time goes on in the context of how we feel at that point in time. But the reason why we built it wasn’t to create a new stream. It was to insert ourselves into digital commerce in a way that we and our clients control on destiny and that’s huge,’ he said.
When Scharf made his comment about tokenization being ‘the single biggest change’ in payments, he argued that the way tokens have been deployed goes way beyond simply improving security. ‘When we first started talking about tokenization publicly, everyone was focused on the security aspects of it. The idea of taking the actual account number out of the flow, common sense is that’s a good thing, especially in the light of the data compromises that we’ve seen,’ he said. ‘But we also talked about – when we announced tokenization – was ‘Hey, because of tokenization, there is series of products that we are going to see in the marketplace that are now possible because of tokenization.’ Apple Pay is the first example of a product that wouldn’t have been possible unless the network community created tokenization.’

This post was published at Pymnts on November 13th, 2014.