5 Reasons Why Your Retail Business Needs Tokenization

A 2022 Juniper Research study has found that the total cost of ecommerce fraud to merchants will be more than $48 billion worldwide in 2023. There will be 2.64 billion digital buyers in 2023, which will continue to grow due to the convenience and ease of shopping for products and services with the touch or click of a button. Any business owner that accepts, processes, and stores customer cardholder data is responsible for keeping this information secure and maintaining PCI DSS compliance.

In today’s digital landscape, retail businesses are no longer limited to receiving in-store payments through a point of sale (POS) terminal. Indeed, customers can purchase products and services over the phone, on apps, or on ecommerce websites. Payment flexibility comes with risks of cyberattacks, such as credit card fraud and data breaches. No business or customer wants to deal with these cybersecurity issues. Discover the top five reasons your retail business needs tokenization services.

Every business should prioritize providing excellent customer experiences. This type of experience is positive, reliable, and professional. Customers are more likely to make repeat purchases with a company that makes it easy to find what they need, solves their problems, and offers a straightforward checkout process.

By using tokenization services, your business can ensure that customer payment information is secure and protected from cybercriminals that aim to harm. Sensitive data is replaced with randomly generated tokens useless to hackers because they do not contain relevant details, nor can they be reverse-engineered to the original form.

Additionally, properly implemented tokenization services can be completely transparent to the customer checkout. This gives organizations the security they need without adding friction to the transaction. In turn, they can prevent cart abandonment.

Cybercriminals regularly target businesses that accept and handle cardholder data because this data can be sold or used to make fraudulent purchases. If companies that handle payments do not secure customer cardholder data, they are very susceptible to being data breach victims.

Depending on the organization’s size and industry, this can potentially compromise millions of sensitive data records. In turn, the impacted business can incur devastating fines and legal battles to resolve the cyber disaster. The Ponemon Institute reports that the average cost of a data breach in 2021 is $4.24 million, an estimate gathered from several industries worldwide.

Organizations storing, processing, or transmitting cardholder data must maintain Payment Card Industry Data Security Standard (PCI DSS) requirements. PCI DSS is a payment industry security regulation designed to protect cardholder data.

A reputable cloud tokenization provider can remove sensitive cardholder information from your internal environment. Your business can reduce compliance costs and minimize PCI scope.

For example, our client Pay N Seconds reduced PCI scope by 75 percent and saved 33 percent on PCI compliance, all by working with our cloud-based tokenization platform. IXOPAY can help businesses quickly add or migrate to new processors at no additional cost. Companies like Acima that depend on this functionality can benefit from substantial cost savings.

In 2020, there were 393,207 reports of credit card fraud. Credit cards are a standard payment type, making them a prime target for hackers. Companies that utilize payment tokenization can strengthen their security of sensitive data. This includes the entire payment process from beginning to end.

After customers make a purchase, the business captures this payment information in their POS terminal, website, or app. The cardholder data is sent to various systems to accept and process the payment to the merchant. Depending on the use case and setup, the merchant’s internal database may store the cardholder data.

By using tokenization, this valuable payment data is not stored or accessed on an insecure system. This will improve the company’s payment security stack and help mitigate any risks of compromised card information due to breaches or card fraud. Additionally, tokenization providers such as IXOPAY can offer complementary technologies to enhance security further and reduce fraud, including network tokens and 3DS.

Do you offer subscription-based products or services? If so, a tokenization provider can help you quickly and safely store customer payment information outside your internal systems. Raw payment data is replaced with tokens that can retain the bank identification number (BIN) and the last four digits of the card. A single token works with any payment gateway, PSP, or API endpoint, giving you the freedom to own your payment data and process payments from anywhere at any time. Customers love the convenience of having their card details stored on file to make automatic or repeat purchases without manually entering card data each time they check out. Less checkout friction helps reduce cart abandonment (customers leave the checkout before completing the transaction).

Businesses can also benefit from using an account updater service through their preferred tokenization provider. Account updater refreshes expired, lost, or stolen cardholder details automatically. This payment service helps prevent product and service interruptions. Instead of customers missing an order due to a payment decline, an account updater will work with card brands and service providers to quickly refresh any outdated information.

After reading this article, we hope it helped highlight a few of the many reasons to use tokenization to protect your retail business and customers from cyberattacks and why payment tokenization is an effective addition to your holistic security solution. If you would like to learn more about payment tokenization, contact our expert team at IXOPAY today. We would love to help secure your most sensitive data, maintain PCI DSS compliance, and streamline your payment processes.