Tokenization and the frictionless world of tomorrow
Given the evolution of consumer sentiment in terms of frictionless payment, it should come as no surprise that, according to a MarketsandMarkets report, the global tokenization market size is predicted to more than double between 2020 and 2025.4
Furthermore, tokenization technology lends itself to broader advantages for every player involved in a transaction, according to Jukka Yliuntinen, Head of Digital Payment Solutions at G+D. Consumers, he says, are assured of data security while being rewarded with a frictionless process, as well as the extended capabilities to manage payment information and interactions. Merchants benefit not only from customer loyalty and reduced abandonment at the till, as a result of a more seamless journey, but also from easier PCI compliance by way of data encryption.
“Because card information is stored on a secure token,” Dawson explains, “the retailer or checkout is simply passing that token to the payment provider, who decrypts it and uses the card data to create the transaction. It’s a really secure way to enable smaller retailers and different types of business models to seamlessly create a payment flow.” Likewise, payment providers also benefit from data security provided by encryption and the secure transferal of payment data, as it leads to reduced incidence or risk of fraud, as well as a better relationship with e-commerce and traditional brick-and-mortar customers.
Overall, the hesitancy removed by digital necessity at the height of the COVID-19 pandemic has led to greater consumer trust and willingness to part with data, opening the door to opportunity. In the wake of this growing desire for a more contactless reality, it is up to each player within the transaction landscape to act. Yes, the horse has indeed bolted – and there has never been a better time for the industry to follow.