Anyone operating a business that deals with customer payment data has faced the challenge of keeping stored payment data secure and up to date. For merchants and merchant aggregators, finding a payment vaulting solution with the features to secure this payment data is critical.
Network tokens represent an exciting opportunity in securing and transacting with card payments, enabling merchants to easily protect sensitive information while optimising costs and the acceptance rates.
According to Visa Navigate, network tokens provide many major advantages, such as a 2.1% average improvement in authorization rates and a 26% average reduction in fraud. Mastercard has seen acceptance rate growth of up to 3.0% on first-attempt transactions.
Growing Digital Commerce Through Tokenization - Mastercard - April-2023
As the global payments industry increases its adoption of network tokens, it is crucial to have the necessary tools and digital resources in place to support network tokens in your payment system. At the same time, merchants must consider how to maintain operational resilience and efficiency when working with payment processors that do not yet accept network tokens. Orchestration provides this level of flexibility in an evolving payments space - in this case, as gateways decide how and if they will accept transactions submitted using a network token.
Let’s explore the world of opportunities network tokens offer to merchants — and how merchants can best adopt and implement network tokens in their payment systems.
An Overview of Network Tokenization: Definition & Benefits
Recently, the Spreedly team published Network Tokenization Explained, a comprehensive overview of what network tokenization is and how it benefits merchants and merchant aggregators.
To recap, network tokenization is a process that replaces primary account numbers (PANs) used in payments with a token that represents the PAN. Each network token is associated with a singular domain belonging to a specific merchant and keeps the payment details represented by the token secure and private throughout the payment process. Unlike a 3rd-party token or processor token, network tokens are provisioned in partnership with the card-networks and issuing banks.
Key benefits of network tokenization include:
- Increased security via merchant-specific authentications
- Reduced declines related to expirations, fraud, or inaccurate payment details
- Improved checkout experiences for customers
- Reduced PCI scope
- Simplified recurring payments
- Increased cost savings via reduced processing costs
Check out the full version of Network Tokenization Explained to discover specifics on the network token process.
How are Network Tokens & Advanced Vaulting Related?
As the payments space has increased in digital complexity, the need for more advanced payment storage and lifecycle management solutions has become apparent for merchants and merchant aggregators.
Advanced Vaulting is a new service offered by Spreedly that combines the advantages of many distinct and vital lifecycle features that modernize a merchant’s payment system. A key component of this product is the standard provisioning of network tokens for all eligible stored cards.
The Advanced Vault enables merchants to leverage network tokens to maximize the value of vaulted data, all while providing the necessary configuration capabilities to increase acceptance rates, improve the overall user experience, and reduce the costs of lifecycle management.
Network tokens and advanced vaulting can be advantageous for many merchant use cases, including:
- Recurring payments that require up-to-date payment data or card-on-file information
- Proactively communicating with customers regarding changes to payment information (such as a suspended or deactivated card) to reduce revenue churn from non-updated payment data
- Optimizing the customer experience via highly efficient authorizations and automatically updated payment data to simplify the overall payment experience
To further increase the value of vaulting and network tokenization, Spreedly has partnered with Mastercard’s MDES for Merchants (M4M), enabling the storage of both network tokens and vaulted PAN tokens via the Spreedly payment orchestration solution.
In turn, merchants and merchant aggregators are provided with far greater flexibility when it comes to leveraging the right mix of network tokens and PAN tokens according to their specific payment needs.
Additionally, Spreedly’s agnostic approach to payment orchestration ensures that merchants gain access to network tokens that are compatible with a wide range of payment service providers (PSPs), including compatibility with multiple different payment gateways.
How Does Network Tokenization Protect PAN Data?
Network tokenization, like all tokenization, converts sensitive PAN data into an innocuous token tied to the merchant. Merchants can then leverage this token across the entire payment transaction. As an added layer of security, a single-use cryptogram is sent across the transacting parties at time of transaction.
From a PCI perspective in a non-network token transaction, raw PAN data may be exposed to different parties along the way. While this is revealed to secure, PCI-compliant providers, it still comes with exposing actual payment data belonging to a customer. Network tokens secure payment data at provisioning and it maintains that format as it passes through all participants in the payment process, including PSPs/acquirers, card networks, and issuers.
Bundling Network Tokens & Account Updater Improves Customer Lifecycles
Optimizing the customer lifecycle is crucial for long-term success.
With an Advanced Vaulting solution, key features like network tokenization and account updating tools are combined to improve these lifecycles through enhanced and frictionless customer experiences.
Account Updater is one feature in Spreedly’s Advanced Vaulting solution that keeps stored customer payment data up to date. While network tokens have this update-functionality inherent in their design, Account Updater updates the stored PAN of stored cards as needed — such as changes to expiration dates — thus allowing the network tokens to receive proactive life cycle management updates.
When bundled together, Account Updater and network tokens work synergistically to improve the customer experience immensely and — thus — improve overall customer payment lifecycles. At Spreedly, we see value in storing PAN while also provisioning network tokens together to provider flexibility and optionality for transacting across endpoints.
Spreedly’s Advanced Vault Makes Adopting Network Tokens Simple
At Spreedly, our payment orchestration solutions go above and beyond generic payment vaulting.
With our Advanced Vaulting solution, merchants gain access to a diverse payment ecosystem with network token and account updater functionality. Plus, our solutions are tailored to your exact business needs and designed to scale with you as your business grows.
Embracing modern payment solutions, like network tokens, is the key to an efficient payment system.
Spreedly’s modern feature set — which includes network tokens, Account Updater, data enrichment, and rule-based vault-management — ensures merchants have a high-value vaulting solution that drives revenue, customer retention, and overall exceptional performance. Network tokens are an inherent feature of the Advanced Vault that come with no additional costs so that each of Spreedly’s clients can choose to leverage and employ them as they see fit.
Discover the power of Spreedly for solving the modern vaulting dilemma today.
(Growing Digital Commerce Through Tokenization - Mastercard - April-2023)