We all have used credit cards and Digital payment wallets. However, nowadays carrying a credit card or debit card seems to be a burden. The technology is very rapidly moving towards digital payment wallets e.g. Apple Pay, Samsung Pay and Google Pay etc. These wallets provide the liberty of not carrying a physical card and transaction can still be done at ease. It also provides an additional layer of security as the digital payment system passes the Virtual Card Number (Token) instead of actual Card number. Following important stake holding parties are involved in the digitization process:
The digitization process of the cards consists of three main stages,
1) Provisioning: In this process, a customer enrols with a digital payment service provider by providing card details such as Card No, Card Expiry, Security Code, etc. The digital payment service provider requests a token from the TSP.Once the token is assigned to enrolled account or customer, the token service provider sends the token details to the digital payment service provider and replaces the Card No details with the token details and the same is used for online and NFC payment. The provisioning process is further sub-divided in to three steps
At first, the token service provider checks the eligibility of the cardholder with the issuer. Based upon the eligibility criteria checked in first step, TSP would take appropriate action, e.g. approve, decline, or step-up, based on attributes to provision the token. In the last step, the TSP allows the issuer to provide the supported methods of cardholder step up Authentication such as OTP validation.
2)Transaction Processing: For the transaction processing the customers, do not require its physical card. They can tap their mobile that is registered with payment wallet, to the NFC enabled POS terminal . It then processes the authorization and appropriate action will be taken care based upon the account eligibility. The transaction flow can be visualized as:
Clearing Process for Merchant: The clearing process include token details in the clearing file. It consists of a few steps:
3)Token Life Cycle Management: Apart from provisioning and transaction, the token service provider takes care of Token Life Cycle Management. There are 3 more sub-stages in the Token Life cycle apart from an Active token:
In Summary the usage of digital wallet very easy way of transacting, as it allows the customer for a cardless transaction. It also provides an extra layer of security. The tokenisation helps by way of a virtual Card Number, which keep away the original card details from the Acquirer. The original card details are only exposed to Schemes and Issuer. The life cycle management of tokens gives the privilege to activate, de-activate or resume the token services when needed and controllable at customers fingertip.