The Clearing House says it plans to boost security and better protect customers from cyber hacks and fraud via tokenization, according to a company press release Monday (May 2).
By substituting a customer’s actual account numbers or sensitive data with random digits or tokens, the process reduces the need for customers’ actual personal information to be stored away from their bank by other entities such as FinTechs, billers or retailers.
If the accounts are compromised by fraudsters, the tokens can be deactivated and made useless, thereby protecting the customer.
The service is currently available for bank account and routing numbers on the company’s real-time payment (RTP) network. Tokenization will become available for deposits and checking accounts over the company’s automated clearing house (ACH) EPN network later in the quarter.
Russ Waterhouse, the executive vice president of product and strategy with The Clearing House, spoke with Karen Webster about the widespread risk of hacking and how that drove The Clearing House to launch its new tokenizing initiative.
Waterhouse said risks are getting more severe every day and demand a more advanced – and personal – level of security.
“What we’re trying to do with that is put the control back to the consumer,” he said, naming “transparency and control of bills” among people’s prime concerns.
The new service is designed to give consumers a “dashboard where they can manage their financial lives,” he said, calling it an improvement over other types of subscriptions and security plans that people often find challenging to use when managing their finances.
Waterhouse said the risk of something going wrong with the new service has been “vastly diminished.”
The move comes at a time when The Clearing House has seen its ACH transaction volume grow by about 10% this year, recent company announcements show, as both consumers and businesses have been making more payments electronically.
Read more: Faster Payment Methods Will Soon Be the Norm as Consumers Rely on Smartphones
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