In this opinion piece, Megan Simons, Head of Products and Innovation, Mastercard Australasia, looks at the latest innovation protecting our payments. "Tokenisation" is the new force in safe & convenient payments.
The pandemic has accelerated the uptake of contactless and digital payment experiences in our daily lives. A third of Kiwis (33 per cent) now say they want to leave their house without a wallet, using their smartphones or other digital devices to pay. When shopping online, consumers have new expectations when it comes to how their personal and payment details are protected.
That's where a new payment technology, tokenisation, comes in.
Tokenisation is the process of replacing traditional payment card details, such as the 16-digit number or expiry date on the front of a payment card, with an encrypted 'token'.
Each token is unique to the device it is saved on, or customer-to-business relationship.
As a result, sensitive payment data is never transmitted, and card details saved on file are not stored in plain sight, meaning they cannot be intercepted or stolen. With 56 per cent of Kiwis claiming they would be more likely to shop at a business that uses technology to prevent their card details being stolen, tokenisation gives businesses peace of mind when holding their customers' payments data, while providing an improved, frictionless checkout experience for consumers.
Tokens are also completely updateable. This means if the physical card details ever change (usually when a card expires or when a replacement card is issued), the new details are automatically mapped back to the token, saving the hassle of updating card details across multiple devices or retailers and preventing unnecessary declines.
The tectonic plates of commerce are shifting, making it an exciting time for payment and digital technology. Mastercard New Zealand's 2021 Digital Payments research found that security and trust is a top priority for shoppers: 62 per cent were concerned about the security of their banking details while shopping online, while one in three (66 per cent) said their reason for not saving information when shopping online is because they don't believe that information is secure.
Despite these concerns, Kiwis have a clear appetite for the convenience of digital payments. With the popularity of digital subscription and app-based services like Netflix and My Food Bag, come new expectations when it comes to how we pay and the checkout experience.
Kiwis look to local organisations to provide new, frictionless and convenient ways to pay – matching the streamlined digital experiences they've become accustomed to – without compromising on security, because while interacting online has never been easier, criminals have never been smarter.
Many Kiwis are already benefitting from this new technology without even knowing it. Tokenisation powers the digital wallet on mobile devices, protects card details stored on file with some of New Zealand's biggest retailers, and ensures that one-off transactions take place safely and securely with businesses offering Click to Pay checkout functionality.
The technology underpins many of the innovations Mastercard are making in protecting payments around the world. It will enable new ways to pay that haven't hit the mainstream yet – such as voice commerce, checkout-free retail and shopping on the Internet of Things (IoT).
Innovation is not always overt, but is prevalent in the way we pay. While most people don't wake up each morning and think about payments, as more of our lives move online it's important to take an interest in the technology that protects us in this space. Every day, the way we live, work, play, and shop is changing.
At Mastercard we are leveraging our insights, technology, and partnerships to innovate, building the future of simple, safe and smart payments one day at a time, with tokenisation at the centre.
For more information on how tokenisation can help your business, speak to your bank or payment service provider today.