Visa "Token" Launch to Start With U.S. Financial Firms Next Month

   By Tess Stynes 
 

Visa Inc. (V) said its new "token" service that aims to improve the security of electronic transactions made online and with mobile devices will be available to U.S. financial companies that issue its credit cards beginning next month.

Visa said it would roll out the service to financial institutions in phases--initially supporting early participants in the "Apple Pay" launch, and then extending the service availability to all of its U.S. clients.

A phased rollout of the service that uses technology called "tokenization" will begin overseas starting next year, the company said.

The move is part of a broader push by card-issuing banks and merchants to improve security for electronic payments.

The technology can be used for online transactions, payments made in a physical store with a smartphone, and with merchant applications that consumers load onto a smartphone. By getting rid of the sensitive card information, banks and merchants can leave hackers with nothing of value to steal if they break into their computer servers.

Both Visa and rival MasterCard Inc. (MA) are rolling out the technology, which replaces cardholder information such as account numbers and expiration dates with a unique series of numbers that validates the customer's identity.

Visa's launch comes the same day as Apple Inc. (AAPL) introduced a digital-payments service tied to its iPhone 6 handset that will allow consumers to make purchases using just their smartphones, marking the company's first big push into brick-and-mortar payments.

Apple said it hopes to speed up the checkout process, make credit-card payments more secure and ultimately to replace physical wallets.

Apple Pay, as the new payments service is known, will be able to store credit cards from Visa, MasterCard and American Express Co. and will work at a number of stores, Apple said.

Write to Tess Stynes at [e-mail]

Subscribe to WSJ: http://online.wsj.com?mod=djnwires