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This Week in Payments 9-26-2014

Boston Fed identifies tokenization as key mobile payments feature


In a summary of a June meeting released Tuesday by the Federal Reserve Bank of Boston, the Mobile Payments Industry Workgroup (MPIW) found that developments in tokenization should instill confidence in a payments environment challenged by frequent data breaches and other payments fraud activity, but some hurdles to broad industry adoption of tokenization remain, particularly around standards and coordination of the different solutions.

According to the MPIW, payment tokenization is defined as the process of randomly generating a substitute value to replace sensitive information. When used in financial transactions, tokens can replace payment credentials such as a bank account or credit/debit card numbers. Removing these sensitive credentials from the transaction flow improves the security of the payment and is a key benefit of tokenization, the bank said in the announcement.

“The security of mobile payments has always been a top concern and one of the main barriers to widespread adoption of certain mobile and digital payment technologies,” said Marianne Crowe, vice president of payment strategies at the Federal Reserve Bank of Boston and chair of the MPIW.

PayPal enters agreements with major bitcoin processors


PayPal has entered into agreements with bitcoin processors BitPay, Coinbase and GoCoin to enable North American digital goods merchants to accept the cryptocurrency after they integrate the option through the PayPal Payments Hub.

“We chose to work with BitPay, Coinbase and GoCoin because of our commitment to offering innovative and safer ways for businesses to accept payments,” Scott Ellison, senior director of corporate strategy for PayPal, wrote in a company blog post. “All three companies have taken steps to ensure that they know their customers and that those customers are offered certain protections. We believe digital goods merchants will be excited to work with these industry-leading companies to sell ringtones, games and music and get paid with Bitcoin.”

Companies’ Worst Hacking Threat May Be Their Own Workers

By Chris Strohm and Jordon Robertson via Bloomberg

Fired from a job as a technology contractor for a Toyota Motor Corp. factory in Kentucky, Ibrahimshah Shahulhameed went home, logged into the company’s computer network and attacked it with programming commands.

It took the automaker months to fix the damage and landed Shahulhameed in prison. He is appealing the conviction.

While attention has been drawn recently to outsiders suspected of attacking companies such as Home Depot and JPMorgan Chase, Shahulhameed’s case illustrates the growing threat from within. U.S. companies and organizations suffered $40 billion in losses from unauthorized use of computers by employees last year, according to SpectorSoft Corp. based in Vero Beach, Florida, which develops software that companies can use to monitor Internet activity of their workers.

Apple Pay or Other Tap-to-Pay Services? Read This First

by Charlie Wells via Wall Street Journal

Technology companies want you to lose your wallet. The jury is still out on what this means for your money.

Apple says it sold over 10 million units of its latest iPhone last weekend. That means over 10 million devices will be compatible with the company’s Apple Pay, a service launching in October that will let users forgo cash or plastic and pay merchants with the tap of a phone. The service is linked to a credit or debit card.

Apple’s entry is just the latest in an expanding galaxy of mobile-payment systems with tap-to-pay capabilities.

EU Cracks Down on Mobile Payments


The European Union Council of Ministers is preparing to toughen the rules for all mobile and digital payments, according to a report in

According to the report, “The Payment Services Directive in the EU, drafted by the Council of Ministers’ presidency, recommends that the regulations should mandate ‘strong customer authentication’ over a range of digital payment schemes, including ‘sensitive payment data to be used in a wallet solution.’”


Microsoft Getting Serious About Mobile Payments With Their Latest Hire

By Tyler Lee via

So we know that Microsoft isn’t opposed to mobile payments, after all there is Microsoft Wallet on Windows Phone, but could Microsoft be thinking about getting more involved with the service and making it as possible contender to the likes of Apple Pay, Google Wallet, and Softcard (formerly known as ISIS)?

Well according to a report from Re/code, they could be. It seems that Microsoft has recently hired Iain Kennedy, the former payments product manager who been at Amazon for the past six years before jumping ship to Microsoft. Kennedy is now the product manager for Microsoft’s commerce platform which has some speculating that perhaps Microsoft could be thinking of rejuvenating their mobile payment efforts.

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