Tokenization

Registration Tokens: Simplifying Online Transactions

Business Scenario

Imagine you run an online store and want to offer your customers the convenience of one-click checkout. Registration Tokens are your solution.

Benefits:

• Simplifies PCI Compliance: By removing sensitive data from your environment, Registration Tokens help you meet PCI compliance requirements more easily.
• Enhances Security: Reduces the risk of data breaches by not storing sensitive card data.
• Improves Customer Experience: Speeds up the checkout process, making it more convenient for customers.

Example

A customer shopping on your online store can save their card details securely using a Registration Token. The next time they shop, they can complete their purchase with just one click, without having to re-enter their card details. This convenience can lead to increased customer satisfaction and loyalty.

Omni Tokens: Enabling Omnichannel Loyalty Programs

Business Scenario

Suppose you operate both an online store and several physical locations like Starbucks. You want to provide a unified loyalty program that rewards customers for their purchases across all channels. Omni Tokens are designed for this purpose.

Benefits

• Enhances Customer Retention: Enables omnichannel loyalty programs, encouraging repeat business.
• Simplifies Multi-Channel Payment Processing: Use a single token for both online and in-store transactions.
• Provides a Seamless Shopping Experience: Customers enjoy a consistent experience across all channels.

Example

A customer earns loyalty points whether they purchase a coffee online or in-store. Omni Tokens allow you to track these purchases and reward the customer based on their total spending, providing a seamless and rewarding shopping experience.

Network Tokens: Enhancing Security and Efficiency

Business Scenario

Imagine you run a global eCommerce platform. You face the constant challenge of reducing fraud and ensuring high transaction approval rates. Network tokens, provided by card networks like Visa or Mastercard, can be a game-changer.

Challenges Resolved by Network Tokens

Out-of-date Accounts

One of the biggest challenges in eCommerce is dealing with stored card details that become unusable when cards are lost, stolen, or expired. This often leads to cart abandonment, as studies indicate that 35% of cardholders stop shopping after their card has been declined once. Network tokens address this issue by being proactively updated in real-time by issuing banks. This means that lost, stolen, or expired cards become irrelevant, allowing customers to continue using one-click checkout without interruptions. For subscription-based models, this is particularly beneficial as it protects recurring payments and reduces operational costs associated with contacting consumers about expired cards.

Increased Fraud

Merchants in the United States lost about $3.75 for every dollar of online fraud in 2022, with costs increasing nearly 20% compared to 2019. Fraudsters have shifted to card-not-present transactions, increasing the burden on merchants. Network tokens help mitigate this by involving the issuer in the approval process, shifting the risk assessment and liability from the merchant to the issuer. This reduces the cost of fraud and enhances security across the payment ecosystem. By ensuring that fraud at one merchant does not affect other merchants using the same PAN, network tokens build a more secure and trustworthy environment.

False Declines

Authorization rates for merchants often remain below 90%, with false declines leading to lost sales and customer dissatisfaction. Network tokens can significantly improve acceptance rates by involving the issuer in the token approval process. This higher level of trust reduces declines due to outdated card information, ensuring seamless transactions and reducing involuntary churn, especially for subscription businesses. By keeping card details up to date, network tokens enhance the overall customer experience.

Card Data Protection

Payment card data can be stolen at various points, including where it is entered, stored, or transmitted. Network tokens reduce the value of underlying sensitive data, adding an invisible layer of security. Cardholder-initiated transactions require a dynamic cryptogram, which further enhances security. This makes it difficult for criminals to use stolen credentials fraudulently, ensuring secure transactions and protecting both merchants and consumers.

Too Much Friction

With Strong Customer Authentication (SCA) requirements in Europe, card-based payments have become more secure but also more cumbersome for consumers. The additional security checks have introduced friction, leading to approval rate declines. Network tokens can be used for 3D Secure authentication, allowing issuers to silently authenticate cardholders and go frictionless without triggering any challenge process. This reduces friction in the checkout process, improving the customer experience and maintaining high approval rates.

Increased Costs

Merchants pay interchange fees as part of the merchant discount rate (MDR), which can be substantial. Visa and Mastercard have adjusted these fees to encourage the use of network tokens. Visa, for instance, offers reduced interchange fees by up to 10 basis points for transactions using network tokens, while increasing fees for PAN-based transactions. At high transaction volumes, the cost savings from using network tokens can be significant, making them a financially attractive option for merchants.

Benefits

• Reduces Fraud: Secure tokens replace sensitive card details, reducing the risk of unauthorized use.
• Improves Authorization Rates: Involving the issuer in the tokenization process leads to higher transaction approval rates.
• Enhances Customer Experience: Keeps card details up to date, ensuring smooth transactions.
• Cost Savings: Reduces fraud-related losses and lowers interchange fees.
• Compliance: Helps merchants comply with PCI DSS by minimizing the storage of sensitive card data.

Tips for getting started

• 3D Secure: Using 3D Secure with network tokens can shift the liability for fraudulent transactions to the issuer, providing an extra layer of security.
• Real-Time Account Updater: Ensures you have the most current card details, even though network tokens update dynamically.
• Onboarding: Each card scheme requires separate onboarding. Ensure you onboard with each scheme individually to fully leverage network tokens.

Example

Consider a scenario where a customer’s card is stolen. With traditional card-on-file methods, the merchant would need to manually update the card details, which could lead to service interruptions and potential fraud. However, with network tokens, the token updates automatically, ensuring that the customer’s service continues uninterrupted and the risk of fraud is minimized.

External Tokens: Secure Processing with Acquirers

Business Scenario

Consider you accept payments through an acquirer that generates its own tokens. External Tokens allow you to securely process payments and store tokens for future transactions with the same acquirer.

Benefits

• Enhances Security: Uses tokens generated by trusted acquirers, reducing the risk of data breaches.
• Simplifies Payment Processing: Streamlines transactions with specific acquirers.
• Flexible Token Storage: Tailored to your business needs, allowing for various storage options.

Example

When a customer makes a purchase through your store, an External Token is generated. This token can be stored and used for future transactions with Square, ensuring secure and efficient payment processing.

ApplePay Tokens: Seamless Payments for Apple Device Users

Business Scenario

Imagine you run an online store that caters to a large number of Apple device users. Apple Pay tokens can provide a seamless and secure payment experience for your customers.

Benefits

• Enhanced Security: Apple Pay tokens replace sensitive card details with secure tokens, reducing the risk of unauthorized use. Each transaction is authorized with a one-time unique dynamic security code.
• Improved Customer Experience: Apple Pay tokens streamline the checkout process for Apple device users, allowing them to complete purchases quickly and easily using Face ID, Touch ID, or their device passcode.
• Increased Trust: Customers are more likely to trust and use a payment method that is known for its security and ease of use, potentially increasing your sales.

Example

A customer shopping on your online store using their iPhone can use Apple Pay to complete their purchase with just a touch or a glance. The Apple Pay token ensures that their card details are never shared with the merchant, providing a secure and convenient payment experience.