Amid the emergence of real-time payments and the steady growth of automated clearinghouse transactions, The Clearing House Payments Co. LLC is working to mask these transfers with technology that the payment card industry has used for decades. years: tokenization. The work is enormous. “We’re just getting started, it’s going to take time,” said Jeff Williams, senior vice president of New York-based TCH.

The new effort, which has been in the works for some time but was officially announced on Monday, aims to replace deposit and routing account numbers with strings of numbers that would be useless if intercepted by thieves. TCH starts with sound Real-Time Payments Network and will have the capacity in place for its ACH system by June, says Williams. Pittsburgh-based PNC Bank, a TCH-owned institution that serves 9 million customers, is one of the first financial institutions to use the service, known as the Secure Token Exchange.

But before the official announcement of the service, TCH had developed its technology and strategy, first internally and then through limited real-world testing. “We launched it quietly in February,” he told Digital Transactions News. “We are working on small pilots at the moment.” The urgency is particularly evident with real-time transfers, which TCH started offering in 2017. “We need to make sure everything is perfect,” he says, “before we start getting [big] volume on our RTP network.

The company, which is owned by 24 financial institutions including giants like Chase and BofA, has also partnered with data aggregators to extend tokenization to the growing open banking sector. Akoya LLC has signed, along with others Williams cannot yet name. “Data aggregators distribute [their services] to fintechs. It’s so important that these endpoints are tokenized,” he says.

To help the new tokenization service proliferate among financial institutions and other users, TCH does not charge a fee. The service is also not mandatory for TCH users. But “we don’t stop it if the banks want to monetize it,” Williams says.

It highlights the need for tokenization as data security in motion. “There are data vaults. [Banks] have that data there, hosted somewhere. He is still in danger. We believe encryption and tokenization is the right way to go.

As it stands, the RTP network reaches 61% of US demand deposit accounts, according to Williams, with 240 financial institution users. EPN, the private sector ACH network, processes some 70 million transactions per day. But despite the progress the new service has made so far, he wants to guard against inflated expectations. “We’re on first base,” he said. “We want to get some more hits.”

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