About TCH Token Service
Enhanced Security in Digital Transactions
Financial institutions already know that the rise in digital transactions makes doing business a lot easier. But this trend has also led to account numbers being stored in countless locations outside the super-secure banking system. This proliferation of credentials makes account information a potentially vulnerable target for hacking and fraudulent use.
Tokens are an innovative and effective way to address this vulnerability. A token is a random number that stands in for a customer’s account number. Tokens are sent and received through the payments network in the usual way, keeping the actual account number protected and secure.
The Clearing House has been a leader in the development and acceptance of tokens in the financial services industry, working with industry organizations, fintechs, and financial institutions establishing standards and protocols for token use. We’ve operationalized that experience into the TCH Token Service.
TCH Token Service from The Clearing House generates tokens and manages the translation of tokens to actual account numbers within a secure environment.
Tokens enhance Open Banking flows with essential layers of security and control.
Although tokens can be used in place of real account numbers in almost any digital payment transaction, financial institutions that distribute account information to thousands of fintechs on behalf of their customers find the use of tokens to be an especially valuable security component of their process.
Recent standard Open Banking processes have improved the way fintechs and other service providers gain access to the customer’s account information, but, in almost all cases, account numbers still are shared and stored outside the banking system.
TCH Token Service works in tandem with Open Banking protocols to provide financial institutions and their customers with an effective way to share data with more security and control over how the account information is used and managed.
TCH Token Service supports the two data sharing models:
Direct:
Where banks have direct connections to aggregators, banks can connect directly to the Token Service to incorporate tokens into data sharing flows.
Using a Technical Agent
Technical Agents connect to multiple aggregators and the Token Service. The TCH Token Service is integrated with Technical Agents allowing payment tokens where an account number is requested. This option requires minimal implementation activity for the financial institution.
A Technical Agent is a third party designated to request tokens on behalf of a participating financial institution.
For more information about how TCH Token Service can support Open Banking processes for your financial institution, contact us at info@theclearinghouse.org
Compliance Heads Up for Participating Financial Institutions
Whether choosing to have tokens issued for their account numbers or simply receiving payment instructions from their customers or payments from the network in which the other financial institution’s account numbers is a token, financial institutions need to verify that compliance practices, such as AML monitoring and reporting, can accommodate tokenized account numbers. As part of its TCH Token Service, The Clearing House will support translation of a counterparty participant’s tokens to real account numbers for compliance purposes as needed.