Card-on-file (the process of collecting and storing payment card credentials) is fundamental to the card-not-present (CNP) ecosystem, facilitating the delivery of popular payment methods such as one-click ordering and recurring payments.
Growing CNP fraud, and the need for merchants to deliver a seamless user experience, is driving demand for card-on-file EMV payment tokenization. As industry players look to simplify tokenization initiatives, while adding additional value, token gateway solutions can deliver considerable competitive advantages:
1. Enhanced consumer experience
With a token gateway, merchants can support changing consumer behaviors by requesting tokens for multiple use cases, including e-commerce, IoT and in-app payments. This ensures that consumers can transact with confidence, however they choose to pay.
Consumers can also enjoy more convenience. Card-on-file tokenization systems enable payment details to be instantly refreshed when a card is lost, stolen or expires. It means there is no need to manually update their details, or to miss out on a subscription due to redundant card credentials.
2. Reduced complexity
The expansion of card-on-file EMV payment tokenization means that merchants must now connect with multiple payment schemes, each with their own requirements, specifications and interfaces. What’s more, specifications are updated regularly so merchants are required to constantly maintain their systems to stay connected to the schemes.
Token gateways provide a single software interface to multiple token service providers (TSPs) that is aligned with the latest requirements, simplifying management of tokenization activity. It also assures that merchants are constantly aligned with the latest card scheme tokenization specifications.
3. Advanced security
As tokens are unique and restricted in their usage to a specific device, merchant, transaction type or domain, payment tokenization enables issuers and merchants to react and isolate emerging threats, mitigating fraud across all channels. EMV payment tokenization also enables card credentials to be tokenized throughout the entire transaction flow.
Importantly, some token gateway solutions ensure that card-on-file tokenization is not restricted to newly enrolled cards. Existing cards-on-file can be fully tokenized and processed to ensure that the benefits extend to the full merchant operation.
4. Cost savings
By reducing fraud instances and liability, which can account for up to 7.5% of total annual revenue, merchants can significantly reduce overheads through the implementation of a card-on-file tokenization system.
The regulatory burden is also eased. For example, it helps to reduce the costs associated with ensuring PCI DSS compliance for stored card credentials.
In addition, merchants are often charged by their payment service provider (PSP) for each card stored, even if they have expired. When a tokenized card expires, it is automatically replaced in the merchant back-end, reducing total card volumes and therefore costs.
5. Quicker time to market
The need to implement tokenization and integrate with the payment systems is a reality for e-commerce retailers.
Token gateways remove the need for lengthy certification procedures as some are already fully compliant with network tokenization requirements. And if a merchant wants to bring tokenization activity in-house at a later date, functionality can be extended to offer long-term flexibility.
Why token gateways make sense
Token gateways offer simplicity and flexibility in a complex environment. This enables merchants and PSPs to streamline their tokenization initiatives and reap the benefits of advanced security, an enhanced customer experience and significant operational efficiencies.
Rambus’ Token Gateway for E-Commerce solution is one of the first to be qualified under the “Visa Ready” program. This enables token requestors like online merchants, payment service providers and acquirers globally to quickly and securely connect to the Visa Token Service to tokenize card-on-file, otherwise known as credential-on-file, e-commerce transactions.
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