Tokenization and smart cards create a one-two punch to protect member transactions.
By Michelle Thornton 
CUs are rightfully excited about the tokenization security process that underpins the much-talked-about Apple Pay. However, as CUs start to leverage tokenization, they can’t afford to ignore EMV (“chip”) cards, heralded as a huge leap in card security as they made a bigger foray into the U.S. market this year. In simple terms, tokenization enhances security on cardless transactions in mobile and online commerce, as well as at the contactless point of sale. (It does so by removing the credit card number from a transaction and replacing it with a randomly generated number.) In contrast, EMV secures card-based transactions, using a specialized computer chip housed right in the plastic. 
It’s possible to become confused because EMV and tokenization are often talked about in the same breath. They both use cryptography, and are both fraud prevention tools. As a result of the confusion, some credit unions might wonder if having tokenization makes having an EMV strategy and adoption irrelevant. It doesn’t. Each technology is brilliant at what it does. And each one is less brilliant at standing in for the other. In fact, choosing between tokenization and EMV is a little like choosing between your twin children. It’s the wrong idea. To fight fraudulent transactions in as many good ways as possible, credit unions need both tokenization and EMV. Interestingly, the adoption of one may fuel adoption of the other. That is, the October 2015 liability shift for non-EMV transactions (under which the party to the transaction with the least secure technology will carry the liability) is prompting merchants across the country to convert to EMV-enabled terminals. In the process, they’re getting near-field communications capabilities thrown in for good measure. What powers Apple Pay at the terminal? NFC. Deliberately or not, these two really do work as a team. You don’t have to wonder whether to choose tokenization or EMV. Choose both. Fraud is a nasty business these days. Why not give it a one-two punch?
Michelle Thornton is manager of core products for CO-OP Financial Services, a credit union service organization and CUES Supplier member based in Rancho Cucamonga, Calif. Reach her at 800.782.9042, ext. 6162. CUES and Best Innovation Group are partnering to bring the industry Apple Pay, MCX & Beyond: Your Mobile Pay Strategy, Jan. 15 in Dallas.
