Akoya is a first third-party service provider for Tokenised Payments

By Edlyn Cardoza

Akoya is a first third-party service provider to provide access to the Secure Token Exchange (STE), a new optional capability from The Clearing House (TCH) that issues tokens for financial institutions’ account numbers, for the RTP® network and EPN, the real-time payments and Automated Clearing House (ACH) networks operated by TCH.

Financial institutions will be able to tokenise customer account information and share those tokens with FinTechs and data aggregators through Akoya. Instead of account and routing numbers, these tokens can be used for initiating and requesting payments and linking payment accounts.

“Currently, moving money in the United States requires sensitive account information to be widely shared between multiple parties, which increases the risk of fraud if and when the data is exposed. In addition, a breach at one entity holding that data requires a consumer closing and opening a new account at their bank – a complicated, cost-heavy, and cumbersome process,” said Stuart Rubinstein, CEO of Akoya. “Tokenization can mitigate risks and reduce costs in case of a breach since only the token issued to the impacted financial institution needs to be changed – not the underlying account.”

TCH’s STE issues a unique token – a random string of characters to financial institutions that participate in the service and sponsored token requestors. Each token stands in for the actual account number of a deposit account and may be used by a third party (e.g., a FinTech app). Any scenario that requires the storage of account information would see a significant decrease in risk and liability by leveraging tokenised account numbers.

“Akoya will accelerate the adoption of our Secure Token Exchange across financial services and reduce overall risk in the payments space,” said Jeffrey Williams, Senior Vice President of Product Development at TCH. “Tokenization will not affect how payments are conducted on either RTP or ACH rails.”

Akoya will act as an agent for financial institutions participating in TCH’s token service to request and receive tokens, creating a token-requestor gateway for entities connected to Akoya. This removes the need for financial institutions, FinTechs, and data aggregators to integrate directly with TCH’s token service if they have already integrated with Akoya.