COVID-19 has accelerated a consumer shift online, urging people to rethink the way they purchase goods and services. Lockdowns and heightened concerns around health and safety have resulted in soaring numbers of consumers (62%) opting to shop online in the past 18 months (see figure below).
Yet, despite this boom in digital commerce, the checkout process remains a significant source of friction for customers. Nearly 70% of ecommerce visitors abandon shopping carts according to the Baymard Institute, often citing long and complicated procedures.
ECOMMERCE POINTS OF FRICTION
Credential-on-File (CoF) payments have been at the forefront of streamlining online transactions. By allowing retailers to securely store customer payment information, the friction associated with having to enter those details every time customers shop is removed. However, false declines on valid cards are still very high on CoF transactions compared to in-store transactions.
This is due to two main reasons. Firstly, cards can expire, be lost or stolen, resulting in the original card details becoming void. Secondly, issuers are more likely to consider card payments made online fraudulent, leading to more false declines on legitimate purchases.
This not only negatively impacts consumers, but retailers too. On the one hand, abandoned shopping carts result in a direct loss of revenue for merchants, as outstanding purchases are unable to be completed. On the other, a bad user experience often leads to customers opting for the competition, resulting in further loss in revenue – and reputation!
So how can retailers enable a smooth user experience with enhanced security for online shoppers?
Earlier this summer, we hosted a webinar with our partners at Mastercard, discussing how EMV tokenization can bring convenience and security to online retailers and shoppers. The solution leverages industry standards and advanced technology, enabling merchants to ensure the best, most secure digital experience for consumers across all channels and environments.
Along with outlining the key benefits of the solution, the speakers also touched upon how merchants can ensure a straightforward integration and a seamless transition to EMV tokenization.
BENEFITS OF EMV TOKENIZATION
- Frictionless consumer experience
Credential-on-File (CoF) offers the simplest checkout experience. Replacing CoF with EMV tokens allows digital commerce businesses to provide a consistent, intuitive checkout experience, further streamlining the user experience.
But, how? The implementation of push provisioning puts the user in control. In a few clicks, it enables consumers to securely push and tokenise their payment cards directly from their mobile banking app, to retailers and wallets, without having to reach for a physical card.
Furthermore, by embedding Click to Pay functionality, guest checkout users will be able to access credentials without the hassle of typing them in at each payment, thus decreasing the likelihood of cart abandonment and improving the consumer experience.
- Increased security
EMV tokenization directly tackles any security concerns by using the network’s tokenization system – Mastercard Digital Enablement Service (MDES) – and Identity Check to authenticate cardholders, reducing the likelihood of fraud and ensuring security and privacy are integrated into the payment experience.
Users’ payment details are also protected online with several layers of security –including the use of cryptographic data to enforce domain controls across a range of channels and devices. This information is all stored in a PCI DSS certified environment, not only allowing for a seamless payment process, but a more secure one too.
- Higher approval rates
The merchant-bound EMV token replaces the physical card credentials during the transaction authorisation. As it comes with a dynamic transaction cryptogram, user authentication details and additional risk management parameters, issuers can accurately assess if the payment is fraudulent. With more transaction insights and enhanced fraud management, false declines get reduced drastically.
Plus, consumers no longer need to worry about updating their cards details, on each merchant’s system, if their card is lost, stolen or expires, as EMV tokenization enables automatic updates. The technology ensures payment information is kept up to date, while the token remains the same. It is a particularly valuable benefit for subscription-based businesses, which face interruption to their revenue stream every time a customer’s card expires or is lost.
Furthermore, the Mastercard Token Assurance Method can identify when each token has undergone verification and identification. This means shoppers can feel more confident when making online purchases, resulting in higher approval rates for merchants.
HOW TO MAKE THE MOST OF EMV TOKENIZATION
Transitioning to EMV tokenization relies on three key steps. Firstly, making sure the chosen solution has all the latest features and can remain up to date within the fast evolution of the ecosystem. Secondly, merging customer authentication and user approval to increase the trust in the transaction. Thirdly, interacting with issuers with the aim of improving the approval rate.
When implementing EMV tokenization, it’s key that you consider your strategy. Thinking long-term means that your implementation strategy is sustainable in the market. Furthermore, users trust the service more by finding a familiar user experience. For example, displaying the payment card in the same way that it is displayed on Apple Pay. Therefore, merchants can consider implementing value-added use cases like push provisioning or token control from issuer application.
Finally, you need to be able to adapt to constantly changing regulations. Many countries have privacy constraints that require user authentication for debit card online purchases. So, combining the right type of authentication with the tokenization experience is the best way to adjust.
Unleashing full potential
It is important to cover all your bases to ensure that EMV tokenization is implemented seamlessly.
First, it’s important to think about tokenization as a transformational change rather than a one-time solution. So, when thinking about an implementation plan, it’s important to keep in check both short and long-term objectives that you want to achieve. You can make those assessments by evaluating your investment for two possible options, in-house development or implementing through a partner. For example, by going through a partner you can cut your time to market by up to one-third while enabling multiple schemes.
Secondly, your platform needs to be designed in a way that is constantly evolving with changes in the ecosystem. Lastly, use risk parameters to manage any false declined payments alongside authentication with EMV tokenization.
When payments work seamlessly, it’s a win-win situation for everyone, especially the merchants. That’s what Thales can help you achieve, particularly on the execution phase.
We help merchants and payment gateways meet these challenges by integrating the latest APIs and ensuring the ecosystem is optimised to process the tokenized transactions, achieving higher approval rates. The service also transmits risk parameters and user approvals to issuers to help them make decisions on authorisation. All of this is delivered through our TSH cloud platform and SDKs, and is based on our experience with digital payment services in more than 50 markets.