Go to any retailer and you swipe to buy. When you swipe, you send your credit card number to the retailer, the retailer contacts the issuer and the issuer acknowledges the purchase and sends money to the retailer.

But there’s vulnerabilities there, says Kevin Kammer, CEO of Prairie Cloudware, an Omaha startup working on a solution for more secure purchases.

Prairie Cloudware is taking aim at tokenization, an idea where instead of sending your credit car number to the retailer, your card generates a one-time, unique “token” that your issuer will recognize and then send the funds. Retailers don’t store your credit card number and the token itself is useless after that one transaction.

The tokens would be made in virtual vaults created by banks or credit cards, which seemingly would be more secure than every single merchant keeping customer information in a secured database.

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Embrace the giants

The startup, based in Miracle Hills, has been working toward the solution since 2012, but Visa and MasterCard also are working on more or less the identical thing. Apple also is rumored to be using its tokenization in its new payment product.

But Michael Carter, business development and strategist, doesn’t fear the credit card giants beating them to the punch. He embraces it.

“The standards set by Visa and MasterCard will provide the foundation for what we and other digital payment companies deliver in their solutions,” he said. “So, the work by them in this area cannot happen soon enough in our view.

“PCW is convinced that banks ultimately must deliver the new digital payments paradigm, which will rely on standards set by [credit card companies].”

So why haven’t banks already taken the security measures? Carter thinks it’s because they don’t like to be first. They want to see how others do it and follow what works. He also says they are far more welcoming to outside innovation than they once were.

Chrome extension aims for security, ease

Carter says the average American has credit card data stored on more than 28 online retailers, mainly for convenience. But it leaves open a lot of vulnerabilities since a hack of any one of those sites could cause a headache. One in 10 are victims of fraud every year, Carter said.

Prairie Cloudware’s product, Digital Payments Guardian, aims to reduce those headaches by leaving all the credentials in the bank and only sending out tokens.

All of its work is pre-release, but a demo shows promise. The goal is to secure beta customers (they’re in talks with several midsize and local banks) and launch by next year. They hope to white label the product for multiple banks.

A mobile app would allow users to pay in store, while a Google Chrome extension is part of fixing desktop online purchases. Banks would have a page on their site to set up a “vault.”

Users would sign up, create a five-digit pin and then it would populate the debit and credit cards the bank has issued you. You can also add other cards, even gift cards. Users can set limits on what types of purchases and how much each card can spend per transaction or per month. If the user has kids, they can manage a vault for them to control their spending.

The page would ask you to install a browser extension that would make it easy to access the vault. When you go to an online shop, the extension auto-populates the necessary fields and does it in a secure way by creating a token instead of sending the credit card number.

Reap the benefits

Carter sees a number of benefits to banks and consumers.

For banks, they can use it as a marketing opportunity or a way to add more valuable information, like your reward points, bank balance and other data you wouldn’t see otherwise. They also see that you have another bank’s card and offer you their card if it has better terms.

For users, it’s convenience and security in a click, Carter says. It could also help reduce the impulse buy if users see they don’t have enough in their accounts.

“Financial institutions are best positioned to deliver the consumer’s preferred digital payment experience in terms of security, convenience and control,” Carter said. “It’s not about being a digital wallet, it’s about being ‘invited’ by consumers to help make their digital purchases, online or at the point-of-sale, because it’s easier and more secure.

“At the end of the day, consumers know banks and credit unions… will provide zero liability for their digital payments purchases.”