2022 Student Financial Experience Report is now available!Download here

The Tokenized Road to E-Commerce Security

5/29/2019 8:53:00 PM

Swipe. Dip. Tap. For years, consumers have tried to keep up as point-of-sale (POS) technology evolved to stay ahead of identity thieves and their ilk. But while customers were focused on “dipping” their cards with the chip end first and wrapping their brains around the concept of encryption, con artists quietly shifted targets and turned their sites from POS toward e-commerce.

Fortunately for consumers and merchants alike, the phase-one lessons learned by systematically amping up POS security now provide a roadmap for phase two: making e-commerce safer and more secure. With 2020 digital payments expected to surpass the trillion-dollar mark in the U.S. alone, the race is on to fix the weaknesses and vulnerabilities that make the internet an easy target for fraud.

One of the most promising fixes is tokenization, the process that substitutes randomly generated numbers for real account numbers. This technology — which is used in digital wallet platforms such as Google Pay, Apple Pay, and Samsung Pay — is already playing a growing role in phase-two e-commerce data security.

While tokenization has gained favor over encryption because it’s more cost effective and secure, it also has a third advantage. In the context of contactless payments and the role those payments play in PCI compliance, tokens reduce PCI-DSS scope. The technology alone doesn’t guarantee compliance, but if your school accepts card payments, you need to store, process and transmit data securely to be PCI compliant. Tokenization simplifies that process by reducing scope, which diminishes the likelihood of data breaches.

Although data security should be a primary concern when evaluating your payment technology needs, don’t overlook the value of providing a consistent user experience. Students are comfortable using mobile wallets for POS purchases, so offering them a similar e-commerce experience is a great way to replicate the seamlessness they’ve come to expect. Tokenized systems can also be instantly refreshed when cards are lost, stolen, or expired, eliminating the worry and wait typically associated with such events.

In the complex world of payment security, tokens offer simplicity, flexibility and operational efficiencies. The fact that they make transactions easier, safer, and more convenient for students too … that can be your little secret.