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Concepts like tokenization, biometrics, and secure e-commerce have attracted much attention in recent years, and in the past couple of days the nation’s two major payments networks have moved to bring that concept closer to reality for online payments.
Visa on Thursday announced a deal with Netflix Inc. to expand the online-entertainment giant’s use of Visa tokens, random strings of digital characters that stand in for—and mask—actual card credentials. Los Gatos, Calif.-based Netflix, which has been piloting the Visa Token Service since last year, hopes not only to stop more fraud but also to build authorization rates, particularly with common card-on-file transactions, where changes in card numbers can cause transactions to break down.
“As the Visa Token Service and associated payment frameworks continue to scale, we believe low risk, trusted merchants, like Netflix, can realize authorization approval rates and a customer experience on par with the face-to-face environment,” said Vickie Gonzalez, global head of payments at Netflix, in a statement.
Visa earlier this week said its token service, which it debuted four years ago, added 20 payment gateways and technology companies, bringing the number of token requestors worldwide to more than 60. It also underscored its commitment, in place since 2014, to refrain from levying fees for the service to requestors that use Visa for processing. Some industry observers have speculated that the major networks will find themselves under pressure to start charging fees as tokenization activity rises.
Visa’s announcement Thursday came less than a day after news from rival Mastercard Inc. indicating that card network will be moving in the coming months to expand tokenization, introduce more biometric authentication, and dramatically expand its deployment of a technical protocol that streamlines e-commerce checkouts.
All Mastercard-branded cards will be eligible for tokenization by 2020, the network said, adding it is working with seven processors and payment gateways, ranging from Stripe Inc. and Square Inc. to Worldpay Inc., to help merchants process tokens.
Beyond tokenization, Mastercard said it will “begin to roll out” its own technology in the second half of next year for faster and easier online checkouts using Mastercard credentials. This service, built on an EMVCo specification called Secure Remote Commerce, leverages tokens to keep track of consumers’ cards and manage changes in card credentials. EMVCo LLC is a technical-standards consortium of major global payments networks.
The SRC technology is said to be behind a move that emerged earlier this year from the card networks to design a so-called common buy button that would incorporate various payment brands.
To be sure cardholders can tell which brand they are using, Mastercard also said it is introducing new branding requirements for cards on file. “The requirements ensure a consumer is aware they are paying with a Mastercard credential during the checkout process whether it’s in-app, via browser, contactless, voice-enabled devices. or a QR [quick-response code] application,” the network’s news release says.
A Mastercard executive was not immediately available for comment.
Early next year, Mastercard plans to roll out new authentication technology based on biometrics and artificial intelligence, which it says will also help allow users to check out with a single click. The network says it is collaborating with issuers and merchants to introduce the technology, which works within the new 3-D Secure 2.0 standard developed by EMVCo to protect online commerce.
