First Data Corp.'s TransArmor payment-tokenization product soon will be available in VeriFone Systems Inc.'s multilane and petroleum point of sale terminals.

Launched in September, TransArmor uses a combination of tokenization and encryption to secure transaction data as it passes through merchants' payment systems.

VeriFone plans to include TransArmor in its MX800 line of terminals and its Secure PumpPay and Ruby integrated POS products in the first half of 2011, First Data said Thursday. The Atlanta processor's sales channels will market the service, dubbed TransArmor VeriFone Edition, it said.

First Data, a unit of the Kohlberg Kravis Roberts & Co. private-equity firm, would not disclose pricing because it may vary depending on the sales outlet and the merchant.

VeriFone, of San Jose, Calif., said TransArmor will work in conjunction with its VeriShield Protect product that protects sensitive data while in transit. The terminal maker said it will eventually certify all of its terminals to support First Data's product.

TransArmor will help secure data "at rest" by replacing card data with a token number that preserves the value of card data for merchant business operations by allowing them to reference the payment information later, but removes value for fraudsters in that the token cannot be used to make fraudulent cards, Tim Horton, First Data vice president of merchant product management, said in an e-mail.

Security at gas pumps has been a challenge for merchants as the pumps are often left unattended and are easily accessible to tampering — but are still frequented enough by customers to provide abundant payment data from even one compromised pump.

And as terminal makers came out with gas-pump hardware proven to meet the payment industry's security standards, the adoption of this hardware was slow, as high fuel prices had already inflated gas stations' transaction costs, deterring them from spending more on payments.

In related news, VeriFone announced Wednesday that it is working with RSA, the security division of EMC Corp., to sell an advanced encryption service called VeriShield Total Protect.

First Data, which worked with RSA to develop TransArmor, hopes the work between the three companies will lead to something more.

"Together we are working toward an industry standard for security to eliminate confusion for merchants," Horton said. "Based upon this approach, we do not have plans for similar arrangements with other companies."

Similarly, VeriFone expects more from working with First Data.

"The industry has been approaching payment security in a piecemeal fashion, which has slowed adoption," Paul Rasori, VeriFone's senior vice president of global marketing, said in an e-mail.

"Given both companies have a significant presence in the North American marketplace, especially in large retailers and petroleum venues, by working together we expect to accelerate adoption and ease any concerns which many [merchants] have had about making the right choice in competing technologies," Rasori said.

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