The Future of Tokens Will Extend Beyond Payments

As more and more companies adopt tokens as a proxy for the primary account number and other sensitive payment data, the day is fast approaching when the utility of the technology will move beyond the payments box. That’s the forecast from Nate Morgan, senior director for product management at CyberSource, an e-commerce services provider, who spoke at the Merchant Risk Council’s annual conference in Las Vegas Wednesday.

Initially the province of information-technology specialists, tokens will gain utility for marketing and finance teams, Morgan said, especially as more and more transactions are tokenized. CyberSource oversees 2.4 billion tokens, growing at a 44% year-over-year rate, for its clients, he said.

With tokens, which carry no sensitive payment data, other departments within a business can tap into their usefulness to see how consumers purchase across channels. “Now the conversation has moved,” Morgan said. “More interesting to me is the marketing-sales teams. A lot of them have been divorced from sales data for analytics purposes.” In this way, tokens can enable merchants to see their consumers’ buying habits across channels.

For example, tokens are quickly gaining favor as stand-ins for recurring payments in card-on-file environments. But one issue many of these merchants have faced is a bevy of declined transactions, which can happen when a consumer’s card is replaced, when it expires, or following fraudulent use.

Companies like CyberSource, a Visa Inc. subsidiary, offer card-update services to alleviate this issue. To get the point across about the value of tokens, especially network-supplied ones, Morgan referred to a three-month test CyberSource ran on its account-updater service, which offers real-time push updates. In the test, he said, 17 merchants experienced a 5.75% increase in their authorization rates.

Within marketing departments, tokens could be tapped to create offers based on previous shopping actions. Also, they can easily provide a key element for loyalty programs, Morgan said. “A lot of merchants are trying to engage consumers with their own in-app experiences, their own loyalty programs,” he said.

While managing tokens may seem daunting to many merchants, Morgan said a data element called the Payment Account Reference, or PAR, may ease much of the issue. A PAR is an overarching data identifier for a consumer’s card account that can be used to find the correct underlying primary account number. It’s a tool that could minimize card declines when a card is updated.

A PAR could aid omnichannel tracking of a consumer’s transactions, Morgan said, without jeopardizing the inventory of data when a card is replaced.