More smartphone users, easy-to-access loyalty programs and a shift from magnetic strips to mobile wallets, Australia’s mobile payments industry is continuously evolving.
As these new payment experiences improve, so must the security solutions that protect consumer’s confidential account information. One of the buzz words for 2015 is ‘Tokenisation’. A new layer of security for digital payments, Tokenisation removes the primary account number (PAN) from the payment environment, and replaces it with a randomly generated token ID. This means that when a customer swipes their credit or debit card at the checkout counter, or makes an online payment, their PAN isn’t stored in the merchant’s payment system. Tokenisation will be key to unlocking and revealing the next phase of digital payments. Whether you conduct business online or in a brick and mortar store, here are the top 5 business benefits of Tokenisation:
Tokenization can be applied to online payments, credit card plastic, gift cards, NFC (near-field-communication) payments, and mobile devices. Apple Pay is already using Tokenization to secure payments, with Samsung Pay expected to follow suit.
Tokenisation protects sensitive information from those connected to your organisation, including employees, vendors, and suppliers. Merchants are also open to internal theft if payment card information is stored. Tokenisation can help prevent employees from using an organisation’s payment card details illegally.
While any type of organisation can be the victim of a data breach, retailers are often the most profitable targets for hackers. Correctly implemented, Tokenisation can improve security and lessen the compliance burden. With Tokenisation retailers no longer need to store any data, which means they don’t have to invest in as many resources to protect sensitive customer information. The increased security of Tokenisation will also make mobile payments more attractive to businesses and consumers.
Payment tokens are connected to a specific device or application. If someone attempts to use a token in a different environment, the transaction will immediately be declined. The retailer also doesn’t need to see the customer’s personal account number, further increasing security for customers.
The potential applications of Tokenisation can extend beyond finance to information security —delivering possible benefits for government, banking, and health sectors. These potential applications include social security numbers, drivers’ licence numbers, electronic health records, prescriptions, and verification identity checks.
Research from UMR Strategic Research on behalf of Visa shows growing interest among Australian consumers in digital payments, particularly regarding the use of smartphones to make payments. Consumers are actively looking for the best experience across in-store and online. For businesses, providing the easiest path to purchase will give them the competitive edge.
The shift to contactless and mobile payments is accelerating. However, according to Visa, 23 per cent of merchants haven’t upgraded their in-store payment terminals and have no plans to do so. Indue is collaborating with Visa to roll out Tokenisation in Australia in 2015. This follows their success in implementing the system in the US.
In Australia and globally, Tokenisation will create new ways to pay and be paid. For Australia to adopt Tokenisation as a viable system, businesses need to adapt and embrace these new and leading edge technologies.
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.