The digital revolution has created an almost unlimited ability for companies – from startups to the world’s largest – to participate in commerce by creating new experiences through mobile, tablets, PCs and future connected devices. As these new payment experiences evolve, so must the security measures that protect consumers’ confidential account information. Tokenisation is a new layer of security for digital payments, and presents both challenges and opportunities for merchants, financial institutions and consumers in Australia.
There are a number of factors driving the need for tokens, in particular the shift to mobile. The smartphone is our social media manager, personal assistant, DJ and GPS. It is already at the centre of commerce in Australia today. The right infrastructure is in place, and with more acceptance points for mobile, the more we are likely to see consumers using their phone to transact. The mobile is also a gateway to shopping online and mCommerce is increasing, but consumers remain concerned about leaving their card details with different merchants over the web.
Tokenisation will bring an added layer of security to mobile and digital payments without adding friction to the shopping experience. It’s a new layer of security that is needed now.
Technological change is hard to anticipate, the impacts are difficult to predict and its effects on society are often unclear.
What is tokenisation?
Tokenisation replaces cardholder information such as account numbers and expiration dates with a unique series of numbers (a “token”) that can be used for payment without exposing a cardholder’s more sensitive account information.
Payment tokens provide improved protection against potential misuse, because they are connected to a specific device or application. Today, in the chance that a shopper’s customer account details are captured during a data breach, card numbers and expiry dates may be used to conduct a fraudulent transaction in other online environments. With tokenisation, the account details are hidden and protected from a potential fraudster.
As digital payments accelerate and grow, confidential account information is increasingly placed in environments that are not as secure as the face-to-face environment, where we use our chip-enabled cards. In the future, people will transact in digital environments more and more, across multiple devices and applications. Tokenisation hides the consumers’ confidential account information during digital transactions, making digital payments more secure for everyone, everywhere.
In this era of high-profile data breaches, trust and security are paramount for consumers, particularly when they’re shopping on their phone or tablet. The introduction of tokenisation will add a new layer of security in payments, placing greater confidence in shopping over the web. Tokens also offer the potential to prevent disruptions to web and other card on file merchants caused by changes in the underlying card account information. Currently, if an online merchant stores a consumer’s card information on file, any changes to the cardholder’s underlying card information (such as expiry date changes) will cause subsequent transactions to fail. Merchants are forced to contact the customer to obtain the updated card information, a significant cost to merchants and an inconvenience to consumers. With tokens, updates to the card account are automatically applied in the token vault, ensuring uninterrupted payment for merchants and uninterrupted service for consumers.
To find out more about tokenisation and how the technology can work for your business, click here to contact a member of our expert team.