TCH Expands Token Service for RTP as Banks Step Up Adoption

The Clearing House says it is seeing wider adoption of its bank account tokenization solution.

Token Service is designed to safeguard  the information associated with bank account numbers and help mitigate risks tied to fraud and data breaches, The Clearing House (TCH) said in a Monday (Oct. 20) news release.

“When a client links their account information with a third party, tokenization replaces sensitive payment account information with a ‘token,’ protecting consumers by concealing their actual bank account numbers so they are not shared,” the release said.

The service, available for ACH transactions on the EPN® network and for instant payments on the RTP® network, “is now being adopted more broadly by banks, setting an industry standard and paving the way for new applications for payments, data security, and fraud risk mitigation,” the release added.

According to the release, the TCH and participating banks are employing tokens to bolster security in open banking, where data aggregators and FinTechs collect and store large volumes of consumer account data.

In the past, “screen scraping” practices put sensitive account and payment initiation data at risk. The move to API-based data sharing with customer permissioned authentication builds a foundation for scaling tokenized account number distribution and letting customers periodically review permissions for third-party data access.

“Tokens for bank account numbers deliver security and control, allowing customers and their banks to store account details more safely and manage when and how a token can be used for payments,” the release continued.

“By replacing sensitive account numbers with secure tokens, the service significantly reduces the risk of bank account data being used for fraud or being exposed during data breaches.”

The news follows last year’s announcement that TCH’s Real-Time Payments network, the nation’s largest instant payments system, had reached a new single-day record on Oct. 3, processing upwards of 1.8 million transactions worth $5.2 billion.

“The milestone by the RTP network, which handles 98% of the total instant payments volume in the U.S., reflects a growing push across the banking and financial services industries to make instant payments the norm,” PYMNTS wrote at the time.

The record day comes after a year of ongoing expansion for the network, which now averages more than 1.3 million instant payments each day.

“Seeing 1.8 million payments in a single day underscores the momentum we’re seeing across the instant payments ecosystem,” Jim Colassano, THC’s senior vice president of RTP Business Product Management, said in a news release.