Visa recently announced that beginning in April 2022 merchants accepting payments from secure digital wallets—specifically the network tokenized transactions occurring on platforms such as Google Pay, Apple Pay, and Visa Click to Pay—can qualify for reduced interchange fees.
According to Visa, network tokens already can improve authorization rates by more than 2 percent and reduce occurrences of fraud by nearly 30 percent. Now, with the announcement of lower interchange fees for these types of transactions, network tokenization has been further validated as a technology for optimizing payment security and profitability.
Network tokens, much like standard payment tokens (also called provider tokens), are nonsensitive data equivalents that can be used in place of a credit card primary account number (PAN). However, unlike provider tokens, network tokens replace the PAN throughout the entire payment process, which minimizes risk because it never requires the exposure of the raw PAN at any point in the credit card life cycle.
So what are network tokens?
Network tokens are tokens created by the card networks—Visa, Mastercard, Discover, American Express, etc.—that replace cardholder data. The difference between network tokenization and provider tokenization is who is creating the tokens. Network tokens are generated by the card brands, and provider tokens are generated by third-party tokenization providers. Although not all issuers support network tokenization, when it is available, it can be extremely valuable.
TokenEx + Network Tokens + 3DS = Comprehensive Payments Security
When network tokens are combined with complementary fraud prevention technologies such as 3-D Secure (3DS) and Kount, merchants can further enhance the security of their payments by shifting liability for chargebacks and reducing false declines.
Further, a robust third-party provider such as TokenEx offers a full suite of scope-reducing technologies to prevent raw card data from ever entering internal systems. Conversely, working directly with a card network requires you to handle raw cardholder data—since you're the one collecting it and sending it to them—which increases risk and PCI scope. TokenEx can also tokenize PII and other data types in addition to cardholder data for a more holistic security solution.
The benefits of layered payment security can address many merchant needs, from minimizing PCI scope to preventing fraud, lowering interchange fees, enhancing authorization rates, and reducing chargebacks. Contact us today to learn how our data protection and fraud prevention tools can help you optimize your digital payments.