How to safeguard consumers in times like this and choose the right fraud prevention strategies?
The above numbers prove an urgent need for steps to keep what is ours, keep the brands and businesses alive, and protect the ownership of the customers.
Understanding the customers is of utmost necessity! Improving all aspects of the customer journey is the only way to success. Consumers (online shoppers) expect a seamless, fast, and easy payment experience similar to the one they have in-store, but also, expect that their card data is safe and secure from theft.
Despite the start of the proprietary or so-called merchant tokenization in the payment industry, with a primary goal to protect the consumer data, stored as Card-on-File, with the merchant or the PSP, recently, the focus has gone to the below-explained network tokenization and the multiple advantages it brings. It answers the customers’ demands and expectations for security and convenience.
What is network tokenization?
At its core, it’s a process of protecting sensitive cardholder information. It does it on its own or combines with other progressive fintech solutions. It is about replacing sensitive data with a non-sensitive data element that has no value and is called a representative token. While the sensitive information is kept in a secure vault, the token is used to safely transfer the information from one place to another. Even if the token is bridged or compromised during the transfer, no harm can be done since it doesn’t carry any critical value.
The token that replaces the PAN, is generated and stored by the card networks like Visa, Mastercard, and American Express. It is a unique combination of the PAN with the merchant. One funding PAN can have multiple tokens assigned with different merchants, where each transaction is secured with a unique cryptogram. During the transaction process, tokenized card data is shared between the merchant/PSP and the card networks closing the potential gaps from any risks of sensitive data breach throughout the whole payment process (the detokenization is done within the card networks only for the purpose of authorization of the transaction by the issuer).
The credentials behind the token are known to the issuer, having the right to decide on transaction success. This enables better risk assessment i.e. more assurance on the transactions, and leads to much better approval rates