Page 10 - Pay Magazine s2014

J.D. ODer II
Chief Technology Of cer and Senior Vice President of research and Development, Shift4 Corp.
8
companies & people
Smartest People in Payments
the Best idea in payments
“Tokenization and P2PE. The premise is: Why do you need this data in the rst place? What the heck are you doing with it? Are there ways we can get away from it? That was the advent
of tokenization and P2PE.”
company became Shift4, a software as a service (SaaS) provider, and that payment gateway evolved into Dollars on the Net, built by Oder and his team.
“A majority of the gateways today are very simple in their implemen- tation” and he says that they rely heavily on third-party technologies and techniques. “Our code and our system is 100 percent ours,” he notes. “The result is a service level, speed and payment e cacy as good as any solution that’s out there today, with security systems built in from the beginning and not just ‘bolted on’ as needed.”
The formula appears to be work-
ing for Shift4, with an approximate portfolio of $60 billion processed annually and averaging 300 new accounts a month. “My bread is buttered only if the merchant nds value in what I o er them and I think our portfolio size says that they do.”
Let There Be Tokenization
The inception of tokenization, according to Oder, occurred in 2004 while Oder and his Shift4 CEO father were attending a tech- nology tradeshow and the talk
of the convention was merchant
compliance with encryption reg- ulations. Oder asked his father, “Why are we, as an industry, storing this data at all? Why can’t we give them a meaningless value that references that particular card information and free merchants
of the risk and headaches involved in protecting stored card data?” Oder asked hypothetically, adding that Shift4 already had been doing something very similar internally. The company released the tech- nology to the industry in 2005
and recently processed its 7 billionth token. In the last decade, however, Oder says that the term tokenization has been stretched
far beyond his original concept, to reference encrypted card data or surrogate card numbers that have universal acceptance, and therefore universal risk.
“The bottom line is the technology was supposed to be this meaning- less, transaction-based model,
not a one-to-one universal value, and that was our hope because that’s what was presented to the public domain,” says Oder, who learned his lesson on releasing control of tokenization to the industry and now holds eight patents on other card security technologies, most involving point-to-point encryption (P2PE).
These days, Oder says, the com- pany supports a “payment security trifecta,” which includes tokeniza- tion to secure data in a database, P2PE to secure data in transit and EMV to protect businesses from payment card fraud.
J.D.
Oder wants to make two points clear:
payment gateway provider Shift4 Corp. is a family
business, not beholden to anyone in the payments industry. “We are dyed-in-the-wool technologists passionate about the payments business and the technology behind it and we are looking for additional ways to better serve our merchant clients,” says the chief technology o cer and senior vice president
of research and development.
The second point is that he is un- comfortable with being named one of the smartest people in payments. That lack of comfort is because he says that he sees the company’s successes as team e orts. That said, his team is quick to recognize him as the inventor of tokenization, but we’ll get to that later.
Before Shift4 became Shift4 in 1994, it was a technology company that wrote general accounting software. That company had the opportunity to write code connect- ing a client’s point-of-sale system with their credit card processor, creating one of the rst payment gateways, “before we knew what a gateway was,” Oder says. The