FinTech Payments

Tokenization And Getting A 360-Degree View Into Consumer Spending

July 01, 2020 at 09:01AM

Tokens are incredibly powerful tools to secure data and safely transport it from one point to another.

Now is the time to take a broader look at them in the pandemic’s wake and the emphasis on touchless and digital commerce, CyberSource Vice President of Global Acceptance and Processing Mark Norris told PYMNTS in a MasterClass discussion.

He said tokens are capable of providing a wide world of possibilities beyond their traditional use as just security tools.

“We’re starting to see a real shift from that sort of legacy, which hasn’t gone away by any means, into more of a focus on the consumer experience,” Norris said. “Consumers have a lot of different choices on where and how they purchase their items and services, [so] it’s really important that the merchant provides a quality, seamless customer experience in the hopes that they’ll come back for a repeat of it. Balancing that customer experience and the need for risk mitigation of fraud is critical, and tokens can certainly help with that.”

As customers have rapidly restructured their shopping around digital channels, when tokens are integrated correctly and leveraged to their fullest capability by merchants, they can offer what Norris called a “360-degree view into consumers’ spending across multiple channels.”

A Low-Touch Future

He also said that what consumers want most keenly in the post-pandemic world is to feel safe and secure. Customers aren’t just worried about fraudsters making off with their data (although they’re still worried about that). Norris said they’re also concerned about being exposed to COVID-19 while physically interacting with traditional point-of-sale (POS) systems in brick-and-mortar stores.

Tokenized payment data on file can allow merchants to redesign that payment experience to be fully contactless and digitized, Norris said, even when the transaction happens at a physical location.

“The merchant really has to focus on that customer loyalty, and they really want to create an experience [where] the consumer feels comfortable and safe,” he said.

Norris said retailers who will win in the new environment will be the ones who, “can bring that touchless experience to bear for that consumer in a way which we’ve never probably envisioned before.”

“For example, if you’re taking a car in to get it serviced … simply having the ability now for that auto dealer to perhaps send you a link to an invoice and for you to pay that way versus actually interfacing with the traditional point of sale is preferable,” he said. “Our ability to tokenize the card to make the transaction securely happen in those scenarios is very relevant to that merchant and [the] consumer experience.”

Tokenization Can Help Build Sales

But Norris added that tokenization can do more than simply enable contactless payments. He said token-based subscription services — which have been enjoying a sharp rise in popularity — can leave consumers confident that goods or services will show up on time, with no worry about an embedded payment method’s safety. Norris said the average consumer wants to “set it and forget it” when dealing with a subscription, something tokenization makes easy.

He added that smart merchants are increasingly using a tokenized payment method on file as a tool to increase sales by making it easier to pay for purchases.

“We’re seeing some merchants take [that] recurring subscription capability into their brick-and-mortar retail outlets as well,” Norris said.

For example, he said that someone with a gym subscription who decides to buy something at the studio can easily purchase it when there’s a secure card already on file.

Smart Merchants Will Be Proactive

In a world where much seems uncertain and unknown to consumers, a tokenized transaction’s structure offers customers the safety and security they value as the economy begins its long walk back to whatever “normal” will look like.

“The payments ecosystem is more and more complex these days because consumer commerce journeys have made a massive digital migration,” Norris said. “That means even when [consumers] return to the physical world, they will be increasingly moderated by digital tools. The trend has been that merchants are increasingly blurring the lines between card-present and card-not-present experiences in order to generate better, more seamless consumer interactions.”

Tokens make those blurred lines more easily and safely navigable — which means that to be competitive in the newly digital ecosystem, merchants will have to take tokens seriously not only as a security tool, but as a way to enable consumer engagement through new customer experiences.

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