This article describes all of the benefits tokens deliver, but it fails to mention the cost. Retailers that have failed to secure their payment infrastructure will certainly benefit from reduced risk when they accept tokens, but those large retailers that have already tokenized using 3rd party tools face a costly imposition.
The small retailers will indeed benefit as identified:
“Merchants generally offer several payment options for shoppers at checkout, however consumers are often repeatedly tasked with entering their personal information and card number before completing a transaction. Transactions supported by tokenization help issuers seamlessly update customer card details if a new card has been issued due to expiration, loss or theft.
With tokens, customers who have an expired card on file with a retailer can avoid late payments and potential fees from missed billing cycles, eliminating a significant point of friction for both consumers and merchants.
Tokenization Momentum
The success of tokenization is evident, but the payments ecosystem has only just begun to reap its benefits.Tokens protect millions of cardholders worldwide when shopping online, with security as one of the top three reasons consumers choose to pay via connected devices. Merchants have also realized higher authorization rates by as much as 3% points (Source: VisaNet, Jan-March 2019) and fraud reduction by as much as 67% when utilizing tokens as opposed to PANs (Source:VisaNet, Jan-Dec 2018), ultimately reducing retailer costs and customer inconveniences.”
The article then dives into the role tokenization plays in enabling payments for the Connected Car, Voice purchases, and wearables.
Overview by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group
