MasterCard (MA -0.77%) and Visa (V -0.70%) announced today they have formed a new initiative to enhance consumer protection across the payments industry.
In the wake of the Target data breach, many individuals and institutions have called for a greater means of protection against the theft of sensitive information. As a result, the cross-industry group will focus on a number of new initiatives in the payments industry in the United States in an effort to better protect consumers.
"The recent high-profile breaches have served as a catalyst for much needed collaboration between the retail and financial services industry on the issue of payment security," said Visa's president, Ryan McInerney, in press release. "As we have long said, no one industry or technology can solve the issue of payment system fraud on its own. These conversations will serve as a useful forum to share ideas, break down barriers and spur the adoption of next generation security solutions for the benefit of all."
The focus of the group will be to deliver "meaningful solutions that benefit consumers, merchants and financial institutions of all sizes," and it "will focus on a broad range of security-related topics."
To begin, the group plans to push for the adoption of EMV chip technology in the U.S. The technology generates a specific identifying code for every transaction, which the companies said makes it "nearly impossible for criminals to use the card for counterfeit fraud." It is widely adopted across the rest of the world, except the U.S. (The EMV standard was developed in 1996 by Europay (which subsequently merged with MasterCard), MasterCard, and Visa.)
In addition, MasterCard and Visa noted the group will promote tokenization, which is a method of securing transactions made online and through mobile devices, where a unique code replaces the account number when a payment is made. Lastly, the companies highlighted that the cross-industry group will develop a plan that can be acted upon by the entire payments industry to ensure it is secure and successful.
The group will include people from institutions including banks of all sizes, credit unions, acquirers, retailers, point-of-sale device manufacturers, and industry trade groups.
"One of the critical roles we play is to protect consumers and businesses against criminals and fraudsters," noted MasterCard's president of North American markets, Chris McWilton, in the press release. "Only through industry collaboration and cooperation will we address the real and immediate issue of security and maintain consumer confidence and trust. EMV will be the next step in these efforts, alongside enhanced security solutions for online and mobile channels."