Giving consumers control of digital payment credentials


The growth of global e-commerce continues to accelerate. According to data from Morgan Stanley, it now accounts for more than a fifth of all retail sales (22%), up from 15% in 2019.

With the rise of digital e-commerce, more sensitive card details are stored online

Many consumers who previously stuck to in-store purchases have moved to online transactions. With this trend, more and more consumers are seeing their sensitive card details stored at a number of new merchants to ensure simple repeat purchases.

While card-on-file approaches are very convenient, consumers who have now embraced digital payments may experience security issues, encounter friction at checkout, or struggle to keep tabs on retailers whose payment information are stored. These concerns should encourage card issuers to provide easy-to-use tools for consumers to manage their digital payment credentials and, in doing so, also achieve the much-desired premium position.

Moving forward with network tokenization

The use of network tokenization is key to reducing card misuse and providing a seamless experience when paying online. This is where sensitive data is replaced with a secure token that can be passed between card networks, issuers and payment service providers, without the details ever being exposed.

The tokens designed are truly unique to each device and merchant, with no discernible connection between the token and its original number. The result is improved payment authorization rates through greater trust in the process and fewer false transaction declines, as well as reduced fraud rates compared to transactions where user PANs are sent directly .

There are now billions of tokens in use due to their ability to facilitate greater security and increased simplicity. In fact, a recent study predicted that the total number of tokenized payment transactions will exceed 1 trillion worldwide by 2026, up from 680 billion in 2022. In addition to being used to issue payment credentials, they are also integrated into online retail. , IoT applications and in-app payments.

Although highly secure in isolation, traces of digital payment credentials are left on a significant number of e-commerce sites due to the proliferation of tokens. This is reflected in the number of tokens per cardholder increasing tenfold, from a current average of five tokens to potentially over 50.

This raises a puzzle. While tokenization provides value by being able to secure transactions themselves, it is also essential for consumers to be able to monitor these newly tokenized credentials. Indeed, as tokens are on the rise, the perceived challenge may not be the risk of personal information breaches, but rather the need for credential management capability.

Digital payment credentials in one place

The key for card issuers is to offer customers the ability to view and manage all of their digital payment credentials from one central hub. This will help foster transparency and trust, while creating a compelling proposition for card issuers. This token management function could for example be added to an existing mobile banking application, where the consumer can effectively control his payment cards.

Visibility and control at this level can benefit many stakeholders along the transaction chain. Customers have authority over storage locations, as well as how they interact with the issuer, which builds the issuer’s trust profile and builds brand commitment. Issuer-merchant bundles are also a possibility, which could be linked to other applications such as personal money management that may be featured in some issuer wallets. With consumers also empowered to undertake self-service by creating a new token for a service they need or temporarily suspending it for a service that is no longer needed, the workload is lightened for support services. to the issuer’s customers.

Empower consumers

With built-in token management tools, card issuers are able to offer monitoring capabilities to customers, giving visibility into digital payment credentials and their tokenization and storage locations. Consumers gain control by being able to activate, suspend and revoke their tokenized cards in the mobile banking app of their choice. These tools also allow mobile wallet providers to be better integrated.

With e-commerce showing no signs of slowing down, the need to provide a seamless consumer experience is vital as retail continues to evolve. Many consumers are now accustomed to instant digital services and will move away from a multi-step payment process, which will put pressure on organizations to meet their demands. Now, card issuers are able to bring the visibility and control required to manage digital credentials, in addition to tokenizing customer card details. The best way to achieve this is through a banking app or other online interface, putting the power in the hands of consumers.

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Elaine R. Knight