Has your credit card information been exposed in a data breach? If not, it probably will be at some point. According to the Identity Theft Resource Center (ITRC), 14.2 million credit card numbers were exposed in 2017 – an 88% increase from 2016. Given the collective data breaches, there's little reason to expect 2018 and 2019 numbers to improve.
An excellent way to protect existing credit card accounts is to store your information in as few places as possible. However, if you don't store your account information with vendors, you'll have to enter your credit card number for every transaction. That's safer, but tedious – and if you're using an unsecured connection, you're exposing your data each time.
The Token app offers a solution. Token is based on the same tokenization principle that payment systems use to prevent identity theft at the point of sale. The credit card information is replaced by a random token that represents that individual transaction. Thieves could potentially steal the token, but it only has value for an individual transaction.
Chip cards expand that concept to transactions for any given card, but chip card protections don't help for online transactions since information is entered without using the physical card. Token takes things a step further by assigning a virtual token to that card.
Link a specific credit card to Token and the app will generate a new credit card number – in essence, a token – that can be used for an individual transaction. The token stays active until you replace it with a new one. Use a token repeatedly or generate a new token with every transaction. It's your choice.
You can freeze a token if you think you may need it in the future. Refunds will be automatically credited to the payment account you've linked, even if the token has been frozen.
Are you also concerned about your bank accounts? You can register debit cards or bank accounts with Token and receive the same protections.
Token is not without risk. You're trusting Token to protect your account information and real credit card number from data breaches or hacks. Check the Privacy section of the Token website, as well as the Terms and Conditions page, and make sure you're comfortable with Token's information collection, storage, and use before proceeding.
Another potential drawback of Token involves credit card rewards programs. Because Token effectively acts as a middleman in transactions, credit card companies register Token as the merchant. If your rewards are dependent on classifying the transaction – for example, 1% on standard purchases with 3% on travel and 2% on dining – the multipliers won't take effect.
Cards with loyalty connections to specific merchants like airlines and hotel chains may also be affected. Check with your credit card issuer to see if Token will affect your rewards program and any associated perks.
Currently, Token is only available as an app, but a desktop plug-in for Google Chrome is expected soon.
Token can be a useful way to keep your existing credit card accounts safe – but don't forget to guard against fraudulent new accounts as well. Check your credit report regularly for any signs of fraud and apply a credit freeze to keep identity thieves from opening new credit card accounts in your name. If you want an extra layer of protection, consider a credit monitoring service. Let MoneyTips protect your credit and your identity with a free trial.
Identity thieves have many ways to steal your information. Token can help you close off some of those avenues while retaining your shopping convenience.
Protect your credit – protect your identity – protect yourself with a free MoneyTips trial.