The Bureau of Labor Statistics reports that there were 1.45 million retail businesses in the United States as of Q3 2020. Since our growing population depends on these companies for everyday items and services, this number will continue to rise. Any business owner that accepts, processes, and stores customer cardholder data has a huge responsibility to keep this information secure and maintain PCI DSS compliance.
In today’s digital society, retail businesses are no longer limited to just 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. This payment flexibility comes with risks of cyberattacks, such as credit card fraud and data breaches, which is something no business or customer wants. Keep reading to discover the top five reasons your retail business needs tokenization services.
5 Reasons Why Retail Businesses Need Tokenization
1. Better Customer Experience
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 customers’ payment information is secure and protected from cybercriminals that aim to harm. Indeed, this sensitive data is replaced with randomly generated tokens that are useless to hackers because they do not contain any 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 process. This gives organizations the security they need without adding friction to the transaction. In turn, they can prevent cart abandonment.
2. Save Money
It’s no surprise that by using tokenization services, your business can enjoy significant cost savings. How is this possible? If a company that handles payments does not secure customer cardholder data, they are very susceptible to being victims of a data breach. This can potentially compromise millions of sensitive data records, depending on the organization’s size and industry. In turn, the impacted business can incur devastating fines and legal battles to resolve the cyber disaster. To illustrate, 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.
By using a tokenization provider, your business can benefit from a reduced cost of compliance due to minimizing PCI scope. For example, our client Pay N Seconds was able to enjoy a 75 percent reduction in PCI scope and save 33 percent on PCI compliance, all by working with our cloud-based tokenization platform. Further, TokenEx can help businesses quickly add or migrate to new processors at no additional cost. For companies such as Acima that depend on this functionality, this can be a substantial cost advantage.
3. Improve Payment Security
In 2020, there were 393,207 reports of credit card fraud. Credit cards are a standard payment type by customers, which makes them a prime target for hackers. By utilizing payment tokenization, companies 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 solution and thus help mitigate any risks of compromised card information due to breaches or fraud. Additionally, tokenization providers such as TokenEx can offer complementary technologies to further enhance security and reduce fraud, including network tokens and 3DS.
4. Enable Recurring Transactions
Aside from one-time payments, tokenization helps enable recurring transactions for businesses. For example, if you offer subscription-based products and services, a tokenization provider can secure this popular ecommerce payment feature by storing tokens on file as payment methods for repeat customers. Customers love the convenience of having automatic payments or making purchases without needing to manually enter card data each time they check out.
Indeed, recurring billing saves time and energy. Further, businesses can benefit from using an account updater service through their preferred tokenization provider to prevent interruptions of products or services. This service is designed to automatically refresh expired, lost, or stolen cardholder details. 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.
5. Improve Customer Trust and Loyalty
With frequent reports of data breaches and fraud in the news, these cyberattacks can increase customers' awareness of cybersecurity risks and the importance of protecting their data. Aside from achieving goals, businesses must follow security best practices to protect customers’ data and thus improve customer trust and loyalty. If your company website appears unsafe, many visitors will leave. Perhaps your site is secure, but you do not have security measures in place to prevent payment information from being compromised internally. In a worst-case scenario, your business is impacted by a data breach. As a result, half of your customers’ records have been stolen or deleted. When this hits the news, your customers will likely feel they can no longer trust your company to protect their most sensitive data. In turn, your organization will probably lose customer loyalty due to this breach.
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 company’s holistic security solution. If you would like to learn more about payment tokenization, contact our expert team at TokenEx today. We would love to find out how to help secure your most sensitive data, maintain PCI DSS compliance, and streamline your payment processes.