In the great digital leap, roughly $158 billion in brick-and-mortar sales are moving online, according to PYMNTS’ analysis.
And with the continued shift from in-person commerce to card-not-present sales, trust is important. Consumers need to know that personal and payments-related data are secure. Reducing fraud is critical, as fraudsters look toward new avenues of stealing credentials and draining accounts.
For merchants, streamlining the checkout experience can pay dividends in the form of better conversions (and revenues, of course).
Data from Visa — and new initiatives from the payments giant focused on safer payments experiences — indicate that it is tokenization’s time to shine.
To that end, Visa said on Tuesday (June 23) that it has issued its one billionth token since the launch of Visa Token Service in 2014.
The company also said it has rebranded its Rambus Payments token services business (and Bell ID), which was acquired last year, to Token ID — A Solution.
In an interview with Karen Webster, Ansar Ansari, senior vice president of product, digital solutions and Alan Johnson, vice president of product, digital solutions at Visa, said the long-term goal is to extend securing consumer credentials beyond Visa cards. And securing those credentials will mean that, eventually, the payments ecosystem will revolve around eCommerce “IDs” that consumers can take with them no matter where or with whom they transact, across borders and devices.
Tokenization’s Impact On Conversion
As most people reading this well understand, tokenization uses unique identifiers to replace sensitive payment data. The tokenized credentials cannot be stolen or compromised, which makes digital payments safer for consumers and merchants.
As part of its announcement today, Visa said there are more than 13,000 merchants transacting with Visa card-on-file tokens, as well as more than 8,200 issuers enabled on Visa Token Service across 150 markets. Roughly 680 million of those one billion tokens reported today were issued in the past 12 months alone, the company said.
As tokenization continues to take root in card-not-present — and particularly card-on-file — transactions, Ansari said Visa’s goals are twofold: “to make sure that we secure credentials, and to ensure that the consumer experience is as good as it can get.”
As good as it can get for merchants, too. As they’ve continued to embrace tokenization, said Ansari, merchants have seen their conversion rates improve, on average, by 3.2 percentage points — and some have seen lifts of about six to seven percentage points.
That’s because at the most basic level, a simpler verification experience leads to higher buyer conversions, fewer false positives and a more streamlined checkout process.
To get a sense of how that might positively impact an online merchant, consider the fact that every percentage point in lost sales that is converted to a completed transaction flows directly to the bottom line.
For a hypothetical eTailer with, say, $100 billion in annual sales, an incremental 1.5 percent in sales could represent a lift of $1.5 billion, simply by virtue of the higher authorization rates for transactions that leverage tokenized credentials on file.
Tokenization’s Click To Pay Play
As Johnson told Webster, merchants have databases of cards on file, and Visa’s token services help secure those cards, lowering fraud and breach risk while boosting authorization rates. Earlier this year, Mary Kay Bowman, Visa’s head of seller solutions, said that about 60 percent of digital transactions are card on file, which leaves 40 percent done through guest checkout.
And with a nod to further streamlining the customer experience, Johnson and Ansari said that movement of its Visa Checkout merchants to click to pay — a migration that began in January — proceeds apace.
“On the flip side, when a new consumer shows up and they have not stored a card with a merchant, we make it easy for them to access cards and make them available on the fly without having to go through arduous processes," Johnson said. "It’s really our version of a holistic approach to help merchants realize as much value as possible.”
As has been reported, the new button leverages Secure Remote Commerce (SRC) specifications from EMVCo to help merchants accept card payments across Visa and other payment networks for a standardized guest checkout experience.
The click to pay functionality requests tokens from token service providers, which means consumers don't have to enter their card information or have data stored in browsers, aiding the growth in card-on-file activity.
Ansari said the goal of click to pay has not been to add another buy button, but to integrate a simple checkout experience within merchants’ sites and apps. And there’s an added benefit, he told Webster: “Issuers gain a greater degree of transparency and trust that they can build over time.”
The SRC standards, said Ansari, represent a clearly articulated set of rules that other players in the ecosystem, such as the entities that create the terminal and the digital card facilitators, will embrace.
There’s plenty of room to grow, as Ansari noted that buy buttons still have single-digit percentage shares of checkouts.
The eCommerce ID
But beyond increased conversion rates, Johnson and Ansari pointed to the fact that tokenization in the cloud (where credentials are not stored on devices) can follow the consumer wherever he or she wants to transact.
The standardized checkout can lead to a fluid, streamlined experience across devices, platforms and the Internet of Things (IoT).
Tokenization in the cloud, using cloud tokens, lowers the bar for developers to create new payment experiences — and democratizes the opportunity for tokenized credentials to scale, maintained Ansari.
Looking ahead, he said, “[One] can imagine a world where the merchants’ gateways or the payments processor is actually providing the terminal to the merchant and a third-party entity, as a digital platform or a browser itself is playing the role of the digital partner with us.”
Eventually, with cloud tokens enabling people to move from device to device with their credentials, Ansari and Johnson said that Visa’s TokenID service helps establish an eCommerce identity well beyond Visa cards — across all forms of payments (domestic, international and RTP schemes) and non-payment activity alike.
Beyond Visa’s cards, said Johnson, “there are a lot of credentials that are still unclear. There are breach risks, and those risks factor into the commerce experience that we want to continue to enable.”
As he told Webster of tokenization’s move toward mass acceptance: “The hockey stick effect is in full swing.”