More than a token effort

Anyone working in commerce knows convenience is king. 

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Over the past few years, on-demand services have fundamentally changed the way we consume

" Where digital commerce moved the payment moment from across the counter to behind the screen, on-demand services have revolutionised it by enabling a set-and-forget type model.”

And our expectations when we want to buy. 

This has implications for payments too. Where digital commerce moved the payment moment from across the counter to behind the screen, on-demand services have revolutionised it by enabling a set-and-forget type model. This model is called “credential-on-file” and occurs when the merchant captures the customer’s payment details once, keeping them on file, making the payment moment effortless from then on.

As credential-on-file (COF) grows in popularity, there is an opportunity – and a need – to ensure the payment is as convenient and secure as possible. This will in turn help merchants to build greater trust with customers, ensuring long-term loyalty.

With this goal in mind, Visa, in partnership with various payment gateways made a joint commitment to roll out COF tokenisation in Australia – a technology that will make online payments easier and more secure for everyone.

How does COF tokenisation work?

In place of businesses storing card details for direct debit, top-up, loyalty, subscription or account-based online shopping, COF tokenisation replaces the details with unique digital identifiers (‘tokens’) that are used for payment without exposing a cardholder’s sensitive information.

The use of tokens strengthens e-commerce security because it means details such as account numbers and expiry dates are not stored each time a consumer makes a purchase, removing sensitive information from merchant systems.

Each token is merchant-specific, meaning it can only be used with the merchant where it is stored and can either last for a set number of transactions or exist indefinitely, removing the incentive for hackers to try to steal the account data.

The added benefits

In addition to enhancing security, COF tokenisation enables merchants to have consumer payment details instantly updated when a card is lost, stolen or expires, meaning there is no need for the customer to login and update their details or the business to lose out on that payment cycle.

As a result, not only do consumers stand to benefit from this technology, it will enhance sales conversion rates for merchants too.

And alongside increased convenience, tokenisation will enhance consumer trust. Research recently conducted by YouGov found following the adoption of COF tokenisation, 39 per cent of Australians would be more trusting of online businesses, 41 per cent would be more likely to purchase from small retailers and 40 per cent said they would buy from retailers they hadn’t bought from in the past.

This is a technology which will reduce fraud, protect cardholder details and make payment processes easier for everyone, enhancing trust between merchants and their customers. It represents an important step towards a more secure and convenient digital environment, for consumers and merchants alike.

Matt Wood is Head of Digital Products and Partnership at Visa

The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

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