When a shopper whips out their credit card to buy something online, they can feel a lingering worry: Will my card number get stolen by hackers or otherwise misused?
That’s why tokenization, a process that hides your 16-digit number from a merchant and instead uses a separate computer-generated number saved on your mobile phone or smartwatch or stored with a retailer, is the next frontier of ensuring security when paying.
Mastercard said Tuesday (June 3) that nearly half of all its online transactions in Europe are now tokenized. The payment giant unveiled the milestone exactly one year after outlining its plan to phase out manual card entry and achieve 100% tokenization by 2030. The process lets consumers avoid exposing their sensitive account details, preventing a fraudster from using your credit card for nefarious purposes.
Mastercard said that tokenized transactions in Europe, encompassing methods like Secure Card on File (SCOF), Click to Pay and digital wallets, have seen a one-third increase in the past year. The company’s strategy of driving the adoption of safer transactions is gaining ground as growing numbers of eCommerce marketplaces, food delivery services and financial institutions across the continent embrace new standards and solutions.
A major component of this growth is merchant tokenization, specifically known as Secure Card on File (SCOF). By replacing static card numbers stored by merchants with dynamic, merchant-specific tokens, SCOF helps to reduce fraud and improve approval rates. The result: Enhanced security for shoppers and fewer fraud-related losses for businesses.
Another tokenization method, Click to Pay, is also playing a crucial role in simplifying the online checkout experience. This service, now used in 26 European markets, allows consumers to make purchases online without manually entering their card details each time, often using pre-saved, tokenized credentials. Mastercard said that consumer signups for Click to Pay have more than doubled over the past year.
In other tokenization news, FinTech platform Adyen launched a collaboration with Japanese payment brand/credit card issuer JCB, PYMNTS reported in May.
This service aims to bolster the security of credit card transactions for eCommerce merchants.
“eCommerce transactions are growing rapidly, and alongside this growth, fraudulent transactions due to card information breaches are also increasing,” said Tac Watanabe, executive officer and head of brand infrastructure headquarters at JCB. “In response to this trend, it is important to reduce the risk associated with data breaches through COF tokenization and improve our customers’ payment experience by keeping card information up to date.”
