Paying for goods and services with bank cards has become commonplace for us. Keeping your savings on a card rather than in a wallet is convenient and safe. Paying for online purchases with a card is another matter. Many people hesitate to buy the goods they need in online stores. They are afraid to provide their payment card data. And such fears are not unfounded because the prevalence of e-commerce began to actively develop cyber-fraudsters.
Services that provide electronic transactions and payment systems are constantly introducing innovations to protect customer data and improve security. The safest of them today is payment card tokenization. Wallester offers its clients the opportunity to make fast and secure payments using tokenized cards. You can read more about it at https://wallester.com/tokenization. Now, we’ll try to understand the general features of tokenization technology and its scope.
What is it?
Tokenization is a special type of encryption used to protect payment cards. The tokenization of a card is the technology of exchanging its confidential data for an impersonal equivalent, a token. Let’s try to explain what it’s for by giving an example.
You pay for your purchase or utility bill online, and the payment service asks you for the following payment card
- data
- number;
- expiration date;
- CVV-code.
This data is at the disposal of a third-party resource. It can simply save this information, but without proper protection of it for its own selfish purposes can easily use the fraudsters.
Tokenization technology is designed to improve transaction security on the Internet. It protects customer data when making online payments with a card or gadget.
How tokenization works
Let’s simulate another situation to understand how data tokenization works. Suppose that you buy some product in an online store. There are three actors involved in this process:
- You are a consumer.
- The payment service through which payment is made.
- The online store is a seller and a partner of the payment service.
If the payment service uses tokenization, all your card data first goes to a secure network gateway and passes through a device that encrypts it into a unique token. Only then does the token go on to make the financial transaction. The token is created by the payment system for each individual merchant and can only be used to pay for their services and goods.
This way, the merchant does not have access to your card information and only has the token. It is unique for each financial transaction. Even if an intruder intercepts it, he will not be able to use it to make another transaction or recover your card details.
Technology usage
The tokenization technology is actively used by the most popular payment systems in the world, Visa and MasterCard. Initially, it was used in the digital wallets of Apple and Google Play. But now, the scope of its application has significantly expanded. Tokenization opens up the following opportunities for bank card holders.
- Pay for goods and services from a mobile device via Apple Pay, Google Pay, Samsung Pay, Mir Pay, and others. The cardholder initiates the issuance of a token to use this function. The card details necessary to make the payment are added to it. Subsequently, the user does not need to carry a plastic carrier to pay for goods and services. The token can also be managed without the card itself;
- To issue bank digital cards in mobile applications owned by the issuing banks. Often this option is not available for prepaid virtual cards. As an exception, some banks allow tokenization of virtual cards only after the customer has been identified;
- To pay for goods in online stores or services (music subscriptions, software, movies, etc.). For such purposes, the issuance of a unique token with the customer’s bank card data is initiated by the merchant. This procedure is performed through a payment service or acquirer. Due to the tokenization of the client’s bank card, it is convenient for the merchant to store information about the client on the payment system’s server. In the future, the buyer will not need to enter his card number for new purchases. With created token in the future, you can pay for goods or services only in the online store for which it was originally created.
Benefits of tokenization
Payment card tokenization is primarily beneficial for the holders of these cards. The technology gives them the following advantages:
- Easy payment for goods and services. The token is created and saved for a specific online store, so when making a second purchase at that outlet there is no need to enter card details again. The purchase will be made in one click;
- Security. Data of your bank card is stored on the side of the payment system and cannot be accessed by any sellers or third parties;
- Fast pass-through of payments. When paying with tokenized bank cards, there are practically no situations when a payment does not pass, and you have to contact technical support. The payment is made faster if the card has been reissued or extended. There is no need to create a new token in this case.
The use of tokenization technology has benefits for the seller of goods and services. The advantage for the merchant will be first of all an increase in conversion. Payments by tokenized cards are more trustworthy for the antifraud systems of the issuing company. The ability to make payments by extended and reissued cards also contributes to higher conversion. The token created earlier will continue to work for them, i.e. the user does not need to re-tie the card to the services he regularly uses. And the merchant doesn’t have to keep reminding him of it.
Tokenization by Wallester
Wallester offers increased speed and security of your transactions by using tokenized cards. They can be easily added to Apple Pay, Google Pay, and Samsung Pay, provide instant access to funds, and make transactions as secure as possible.
Wallester’s tokenized cards that are added to digital wallets, allow you to pay for purchases with smartphones that support contactless payment. Holders of such cards can be fully confident in the privacy of their information. Payment data cannot be disclosed even if it has been lost at the merchant’s fault.
The technology of payment card tokenization is being actively developed by Visa. To access it, please contact Wallester.
