The increasing utilization of e-commerce shopping worldwide in conjunction with the increasing nature of digital payment options provides an increased gateway for consumers, often blind to the processes, to better understand how their transactions are secured. Alex Gatiragas shares his thoughts on the importance of tokenization for e-commerce payments and its integration into consumer facing interfaces in FinTech Futures:
“While tokenisation provides value in being able to secure transactions themselves, it’s also pivotal for consumers to be able to monitor these newly tokenised credentials. Indeed, as tokens are on the rise, the perceived challenge may not be the risk of personal information being breached but rather the need for a credential management capability.”
While consumers want to understand and feel secure about their digital transactions and footprint, secondary layers of approval are unlikely to help merchants or consumers, as consumers want quick access and merchants are always fearful of increasing cart abandonment. As Gatiragas points out, worldwide e-commerce share, according to Morgan Stanley data, rose from 15% in 2019 to 22% in 2022. No doubt, that the pandemic aided in this increase, which may see some fall-off as consumers desire a return to in-person activities.
Seamless Consumer Experience
What should be noted is that rise occurred without consumer facing tools attached to tokenization. Consumers were able to take advantage of the backend security based on their comfort of the merchant and financial institution’s reliability. Gatiragas does conclude that the process needs to be controlled by all players in the process and clearly explained to consumers as a benefit:
“As e-commerce shows no signs of slowing, the need for a seamless experience to be provided to consumers is vital as retail continues to change. Many consumers are now accustomed to instant digital services and will turn away from a multi-step checkout process, placing pressure on organisations to meet their demands.”
The last statement is key in ensuring continued growth.
E-Commerce Payments: Security vs. Convenience
Consumers can be very savvy in choosing where to shop and how to pay. Players on both ends of that spectrum need to prove to the individuals that their data will be secure but also that the process can be quick and easy. In the absence of that consumers will simply choose to take their business elsewhere, especially as economic pressures continue.
The article points out that review processes in digital wallets or banking apps provide an easy gateway to highlight security without deteriorating from the overall shopping experience. The historic days of balancing a checkbook at the end of the month can now be replaced by monthly financial security reviews, given the tools available from financial institutions.
Overview by Jordan Hirschfield, Director of the Prepaid Advisory Service at Mercator Advisory Group.
