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Education

Navigating ecommerce challenges:

Advancements in tokenization

By Mark Van Horn is not only a critical step for merchants, but also a major
Giesecke+Devrient friction point for customers, influencing the likelihood of
abandoned carts and decreased customer loyalty.
s the landscape of ecommerce expands, it How network tokens are designed
grapples with numerous challenges in its day-
to-day operations. From accommodating a to help merchants, processors
A plethora of payment methods to navigating Network tokens play a crucial role in addressing these
intricate fraud, data security, payment processing and challenges by concealing the cardholder's primary ac-
regulatory concerns, the ecosystem also considers growing count number (PAN). This tokenized approach protects
ecological awareness. sensitive data throughout the payment flow, striking a
balance between security and a seamless customer expe-
The significant surge in online payments presents both rience. The goal is to enhance, maintain up-to-date card
opportunities and complexities for businesses and data, and ultimately optimize approval rates, leading to
consumers alike. However, the increase in transaction increased profits for merchants and successful, secure
steps and diverse payment technologies introduces friction transactions for processors and banks.
into the system. While heightened security measures are
essential to address these challenges, they also carry the Processor tokenization, a proprietary service offered by
risk of false declines. PSPs, acquirers and processors, reduces a merchant's PCI
scope. Unlike general tokens restricted to the merchant
A recent survey highlights that 45 percent of consumers and PSP, network tokenization collaborates with card is-
opt for a competitor after experiencing a false decline, suers and networks to offer additional benefits and protect
resulting in estimated losses of $50.7 billion for retailers the PAN throughout the value chain.
(see http://tinyurl.com/y27w2jft). In ecommerce, payment

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