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The Clearing House Announces Dynamic Credentialing Payments Initiative with Major Banks

The Clearing House 140pxThe Clearing House (TCH) has announced that it is working with its 22 member banks to develop an "industrywide dynamic credentialing solution to improve the safety and soundness of digital payments."

TCH says it is developing a pilot program to demonstrate a solution that would foster an open standard solution that aims to enhance customer account information
safeguards by reducing storage of sensitive information, such as a
customer’s card number, across multiple retailers, virtual wallet providers and
others. TCH says the initiative is designed to ensure that solutions in mobile and other digital payment channels scale in a consistently safe and sound manner.

“Financial institutions have always been the stewards of safe and sound payment systems,” said Richard K. Davis, Chairman, President and Chief Executive Officer, U.S. Bancorp and Chairman of The Clearing House.

“As an industry, we want to do what we can to ensure that privacy and fraud
protection are built into all types of digital payments.”

The pilot will test customers’ ability to use their mobile device to make a purchase within a mobile wallet and at the point of sale.

The customer’s actual account number will be replaced by the issuing bank with a randomly generated temporary number, or dynamic credential, for processing the transaction. This protects a customer’s account information behind bank firewalls and lowers the potential for fraud in digital payments.

Customer experience for payment transactions with mobile devices should not be impacted as the pilot is focused on the “behind the scenes” of a digital payment transaction.

“The development of an innovative, safe and sound solution for digital payments is a natural evolution for The Clearing House,” says The Clearing House President and CEO James Aramanda.

For 160 years The Clearing House has focused on the safety and security of payments for all Americans. First with the development of a central clearing house, then the paper check, followed by electronic payments and now it is ready to ensure digital payments safety and security for future generations.”

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Where is the merchant value proposition or customer value proposition in this whole exercise?

Will there be a liability shift for the merchant? Otherwise, why would he/she accept this..especially when they have the MCX initiative, Durbin rates for debit.

What will the customer get that he/she wouldn't get today? Payments is secure as of today..especially with credit cards - liability-free, ubiquity, peace of mind, rewards, etc.. Can TCH initiative get them anything more?

Oh, btw, another consortium initiative? anyone remember ISIS, Integrion Financial Network??? Good luck, TCH and the banks!

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