The Case for Volume-based Vs Transaction Pricing for Tokenization
Whether your organization is an online merchant, a storefront retailer, a non-profit charity organization, or a university bursar’s office, you are familiar with the growing costs of using payment service providers (PSPs) that take a healthy cut from every payment transaction. Now, PSPs are starting to layer in other services – such as tokenization and fraud detection – that extract more charges for every transaction. PSPs are cleverly creating a fee structure that is a perpetual tax on your business revenue, charitable contributions, or service fees.
Paying for Every Tokenized Transaction is Greedy
Transactional pricing quickly becomes cost prohibitive for most organizations, especially low-margin retailers, e-service subscription providers, and charities. While you may accept the payment card company’s processing fee per transaction as the cost of doing business, there is no reason to have to pay extra for accessing your stored payment account numbers (PANs) and the associated tokens each and every time a payment is processed. The same applies to fraud detection, which is not necessary to run for every recurring payment. Yet a payment processor will try to charge for each service every time, inflating the cost per transaction and adding to their bottom line.
Elastic Volume-based Pricing is the Fair Alternative to Transactional Pricing
A more realistic and economic way of paying for services such as tokenization and fraud detection is by volume and utilization. Using a volume model, after a one-time charge for converting PANs to tokens and storing them in a secure data vault, access to the PANs and tokens incur no additional cost for usage. TokenEx Elastic Volume Pricing charges for storage, not transactions. Likewise, fraud detection services should be judiciously used when specific conditions — as defined by each organization’s business rules — warrant the analysis. When a PAN is encountered for the first time, for example, it may originate from a suspicious IP address, and need to be analyzed for probability of fraudulent use. PANs that have proven reliable don’t need continuous fraud checks for recurring payments.
For purposes of this literature, let’s use a recent example comparing transactional vs volume pricing for tokenization at a monthly subscription service organization with a million strong customer base. A typical PSP will add $.01 each time a stored token and PAN combination is used to process a payment. The subscription merchant will end up paying an additional $0.12 per year, per customer just to use the tokens. Multiply that by one million customers, and that innocuous figure blooms into $120,000 a year loss for the merchant — and profit for the PSP.
TokenEx uses a more realistic math for tokens stored in its SaaS Cloud Security Platform. It costs only $36,000 per year to store one million PANs, or $0.036 per token conversion. After the initial conversion of customer PANs to tokens, access is free. When a merchant acquires a new customer subscription, the PAN is stored in a secure data vault, and a mathematically unrelated token is created for a one-time fee, which is used thereafter for no additional charge. TokenEx Elastic Volume Pricing cuts tokenization costs by nearly 75% compared to transactional pricing by PSPs. The added bonus is that since PANs are not accepted or stored in the merchant’s business systems, the cost of PCI compliance also plummets, saving IT budget and labor, while eliminating the risk of data theft.
Save Money, Increase Security with TokenEx’s Elastic Volume-based Pricing Model
While transactional payment processing is an accepted cost of doing business, don’t believe that you have to put up with it for tokenization. Using a PSP for tokenization will extract more money from your business and lock you into their services.
With TokenEx you get a fairer deal with an elastic volume tokenization pricing model that includes built in buffers to ensure that sudden surges in customer volumes don’t impact your subscription costs. You can even use multiple PSPs, choosing which ones to work with depending on service levels and cost. To enhance your overall data security, only TokenEx can tokenize any sensitive data set, such as Personally Identifiable Information (PII) Protected Health Information (PHI), Non-Public Information (NPI), and Automated Clearing House (ACH) data. Your PSP can’t do that – nor would you want to pay them transaction fees to do so. With TokenEx elastic pricing, you always know the cost of tokenizing and securing all your sensitive data.
Visit our Elastic Pricing page for more details. Already convinced? Then contact TokenEx directly to learn how to make your organization more secure while reducing your payment tokenization and PCI compliance costs.