Token, Inc. and Fidor AG today signed a Memorandum of Understanding (MOU). This MOU will see Token’s software made available within Fidor OS, Fidor AG’s digital banking and open community middleware solution, enabling Banks to offer secure digital payment services to third parties.
When PSD2, the revised European directive on Payment Services, comes into force, Banks will be required to grant third party providers access to their customers’ data. In this context, Banks must now establish how they will accomplish this task while ensuring their data remains highly secure throughout the process.
Together, Token and Fidor AG will bring a uniquely valuable turnkey solution to Banks and licensees of the Fidor OS platform. While using Token and Fidor OS, Banks not only benefit from Fidor’s open banking middleware platform, saving them the cost, effort and time required to design a new open banking interface, it can also use Token to generate new sources of revenue from Payment Initiation Service Providers (PISPs) via the execution of digital transactions and fulfilment of account data requests. This puts Banks in total control of the digital transaction chain, mitigating disintermediation from today’s payment-enabling third parties, like payment schemes and token service providers.
Steve Kirsch, founder and CEO, Token, comments: “Token’s software enables Banks to call the shots in digital payments by launching their own transaction network. This capability, when combined with Fidor’s digital banking and open community middleware, creates a seriously compelling proposition for Banks looking to get ahead in the digital age.”
Steve Kirsch added: “Banks will be able to tap into a comprehensive and fully operational API banking infrastructure complete with the transformative attributes offered by programmable money. In the short-term our platform can be used as a springboard to generate revenues from PSD2 and XS2A. In the longer term, it can be applied to enhance the security, speed, cost and efficiency of a massive range of transaction-based banking functions which currently rely on traditional legacy processes, from bill pay, to e-commerce checkouts, international money transfers, B2B payments, intra-bank transfers and more. Ultimately, we enable Banks to launch programmable money services and new methods of transacting, the use-cases for which are yet to be defined.”
“Fidor OS is a true enabler of next-generation banking, so it makes perfect sense for us to team up with Token,” said Matthias Kröner, CEO, FidorAG. “Like Token, our OS is modern, modular, open, API-based and free of legacy code. This enables Banks to use our suite of technologies to tailor their digital infrastructure to the precise needs of their customers. Adding Token to the mix simply extends the power and control we give to Banks in the digital age. Token’s technology has the potential to revolutionise how transactions, of all kinds, are performed. We want to give our customers this competitive edge as quickly as we can.”
Token combines smart tokenisation and public-key cryptography to provide the industry’s simplest and most secure transaction-based open banking API. In practice, Banks use Token’s software to issue and redeem payment authorisations as smart tokens which can be programmed with any number of terms and conditions in accordance with the instructions of the account holder. This enables each smart token to be uniquely specified to the transaction it represents. They can also execute API callouts to external web services, enabling value added services to be integrated in just the same manner. Sensitive card or account data never leaves the Bank’s systems, masked or otherwise, vastly reducing the Bank’s security vulnerabilities.
By putting a Bank in sole charge of their own digital payment network, Token eliminates the Bank’s need to rely on partners to execute digital transactions and launch new services, making them immune to competitive encroachment and disintermediation. The respective Bank’s brand remains front and centre at all times.