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Frequently Asked Questions

  • Tokens are a replacement for existing bank account numbers and can be used in conjunction with a dedicated RT (routing transit) number. For businesses that use DDA (demand deposit account, a.k.a. checking account) numbers for payment processing, there are several benefits created by replacing regular account numbers with tokens:
    • Tokens provide advantages that are good for a business’s customers, and as a result, the business itself. The customer (account holder) benefits from a separation between their real account information and the token that can be shared with data aggregators, fintechs, billers, disbursers and other entities that store their account information on file. If any of the locations that hold the token are hacked and the token is stolen, the account holding financial institution can replace the token without impact to the account (i.e., the financial institution does not need to re-issue an account number for the breached account).
    • Entities that store account numbers-on-file benefit from tokens because they can lower their risk from a hack or breach. Tokens may lower consumer impact from stolen account data which can help with brand reputation after a negative event. Additionally, using tokens for accounts provides protections similar to tokens used to protect card transactions and can be part of a comprehensive risk practice. Tokens can also help address some types of fraud. Most notably, tokens stolen during a breach can be turned off, and once de-activated cannot be used for fraudulent transactions. When used in the RTP® network, tokens may also have additional controls (such as counterparty restrictions) that can help to mitigate fraud risk by validating that a token is only used by the party that it was issued to. <
    • As payments have become faster on ACH and via the introduction of the RTP network, use cases for tokens are expanding. A particular area of focus is “open banking” where third parties / data aggregators may collect and disseminate account credentials to a large number of fintechs, increasing risk to banks and the payment networks. Token adoption is driven by the CFPB proposed “1033 regulation” (section 1033 of Dodd Frank), that as proposed, would require all banks to share bank account information with certain third parties that have obtained consumer consent. The proposed regulation also permits account tokens to be shared with such third parties, rather than account numbers – this will also be a catalyst for increased adoption in the near term.
    • When it was conceived, the value of tokenization was to provide banks enhanced safety, data security and controls in the event of fraud or breaches. When these events occur, tokens can be suspended/ replaced, avoiding costly account closure and reissuance for banks. Also, tokens will not only provide improved data security at rest and in motion but will also provide some visibility and controls for banks to manage who holds these tokens.

  • TCH offers tokens that operate on the RTP and EPN/ACH networks. Each token is issued under a bank specific RT number and can be used in ACH entries originated by any ODFI through either EPN or FedACH.

  • Tokens can be used immediately on the RTP network in order to facilitate real time payment processing.  EPN is a batch settlement ACH network and tokens will be made available to the network prior to each file processing window. For more information, please contact The Clearing House. Note: token RT numbers should be checked for network eligibility prior to initiating a payment.

  • TCH offers token services directly to depository institutions that are participants in either the RTP or EPN networks. Banks who are already participants in these networks and would like to use tokens, may connect and request them directly from the Token Service. The Clearing House is also partnering with Technical Agents that can provide the means to request and deliver tokens on a bank’s behalf to lower its implementation burden.  If you would like to know more about these options please contact TCHinfo@theclearinghouse.org.

    For non-bank entities wanting to use tokens, we encourage you to request the service from your primary bank.

     

     

  • What are the options for using tokens in my offerings? TCH offers several ways for participant banks to access the Token Service and use tokens. These options range from a very simple method that does not require technology integration, to full feature APIs that enable banks to request tokens so that they may be distributed as a part of their own product offering. We will discuss all available token methodologies with interested financial institutions and find a token solution that is the right fit.

  • Tokens are live and can be included in transactions on the RTP and the EPN/ACH today.

  • The UPIC service is separate. UPICs were an early form of tokenization, and the TCH Token Service brings additional capability, including the ability for tokens to be used for ACH debits (if desired) and for tokens to be used for RTP in addition to ACH.