Life is about to get easier for both online shoppers and merchants

Photo: Matt Cardy/Getty Images.

  • Visa is rolling out tokenisation, a secure and convenient online payment method.
  • The technology will reduce fraud, protect card holder details and make payment processes easier for consumers.
  • Businesses will also benefit from tokenisation because any changes to customers’ cards won’t affect regular payments via direct debit, top-up, regular bills or subscriptions.

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The days of having to update your details with a slew of online merchants each time your payment card is lost or changed are coming to an end. Australian payments leaders have just committed to rolling out a technology that makes paying online more secure and convenient, a move that will benefit both Australian shoppers and retailers.

The technology, called tokenisation, has been developed by Visa, and is being implemented by payment gateways CyberSource, Adyen, Rambus, G+D Mobile Security, SecureCo, Ezidebit, eWAY and Bambora.

Tokenisation works by replacing card details with unique digital identifiers, called tokens, when you shop online. Unlike your card details, the tokens are specific to a merchant or a device, cannot be used elsewhere and can either last for a set number of transactions or exist indefinitely.

The technology makes payments more convenient for online shoppers and for merchants because card details no longer need to be updated when a card is lost, stolen or expires – something that nearly half of Australians (45%) feel is the most annoying consequence of losing a card or having it expire, according to YouGov research. A further 43% of Australian respondents said the most annoying thing is cancelling automatic billing, a result of having to remember merchants and retailers they had subscribed to.

How tokenisation works. Source: Visa.

The entire process acts as an extra layer of security. No individual card details can be accessed through the tokens, and the technology means sensitive information like account numbers are no longer held by merchants, making them less attractive to fraudsters and hackers. Businesses usually store card details for direct debit, top-up, loyalty, subscription or account-based online shopping.

If a token is stolen, it cannot be used for any purpose outside of the one it was created for, and it can be easily cancelled and replaced without affecting the usability of your card.

A boon for businesses

More people are moving online to purchase regular goods; online retail accounted for nearly $27 billion of purchases in Australia over the past 12 months according to the NAB Online Retail Index. And ‘click & collect’ online purchasing accounts for up to 50 per cent of all online sales, including Big W, Woolworths and Dan Murphy’s.

Businesses leveraging tokenisation technology will not only benefit from greater fraud protection, but also help with customer retention.

And tokenisation also means merchants won’t miss out on payments due to customers not having updated their details. According to the YouGov research, nearly a third (30%) of Australians take more than two weeks to update their details when they lose a card or have it expire, and 12% take more than a month.

Some 41% of Australians said they would be more likely to purchase from small retailers, 39% would be more trusting of online businesses and 40% said they would buy from retailers they hadn’t bought from in the past.

“Tokenisation represents a win for Australian merchants, consumers, financial institutions and payments companies alike. The commitment made today by Australian payment gateways and facilitators will enhance the customer experience, help protect against fraud and increase consumer trust, leading to greater conversion for merchants,” said Matt Wood, Visa’s Head of Digital Product and Partnerships for Australia, New Zealand and South Pacific.

The technology is being rolled out immediately, in a move expected to make Australia one of fastest adopters of tokenisation for e-commerce globally.

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