The way we pay for products and services online is about to undergo a significant transformation, especially for those who reside in Europe.
By 2030, Mastercard will eliminate the need for Europeans to manually enter their card numbers when making online purchases, regardless of the platform or device.
This will be a big shift in online transactions since the card numbers will be replaced by "tokens."
The Move to Tokenization
Mastercard plans to replace the traditional 16-digit card number with a randomly generated "token." The 100% e-commerce tokenization process is aimed at enhancing security by making it more difficult for fraudsters to access and misuse card information.
At the time, the credit card company has been collaborating with its partners including banks and other financial institutions to ensure a seamless transition to this new system across Europe by the next decade.
Related Article: Mastercard's P2P Crypto Network is Now Available, Send Money Across EU, Latin America
What Convenience Can Mastercard Provide Six Years From Now?
With tokenization, users will no longer need to repeatedly enter passwords for each transaction. Instead, Mastercard is introducing passkeys, which will replace traditional passwords. Additionally, biometric authentication, such as thumbprint verification, will enable customers to make one-click payments at checkout, further simplifying the payment process.
According to CNBC, stored card information will also benefit from tokenization. When a card is replaced or renewed, the tokenized data can be automatically updated across all platforms where it is stored, guaranteeing continuous service without the need for manual updates.
Reducing Fraud in E-Commerce
Mastercard believes that 100% tokenization will reduce fraud rates.
According to Juniper Research, losses from online payment fraud are projected to exceed $91 billion by 2028, amounting to over $362 billion globally in the next five years. Speaking of fraud, Mastercard revealed plans to bring AI-powered fraud detection tech to enhance card security.
Mastercard reports that the adoption of tokenization is growing at a rate of 50% annually, currently securing about 25% of all e-commerce transactions on its network.
Europe's Leadership in Payment Innovation
Mastercard's decision to implement this change in Europe first is based on the continent's track record of leading payment innovations, such as contactless payments and advanced online banking services.
Valerie Nowak, Executive Vice President of Product and Innovation at Mastercard Europe, expressed confidence in the plan, stating, that this 2030 vision is a win-win for both shoppers and sellers.
The Evolution of Payment Methods
In the same report by CNBC, it was stated that the history of payment methods has seen several significant changes, from the introduction of credit cards in the 1950s and 1960s to the rise of online payments with the internet boom in the early 2000s.
Initially, bank clerks would manually check card numbers against lists of invalid numbers, and zip-zap machines were used to imprint card numbers on carbon paper.
The 1970s and 1980s saw the advent of magnetic stripes and electronic payment terminals, which were eventually replaced by microchip-enabled cards. These advancements paved the way for the widespread use of chip and PIN technology and contactless payments.
Mastercard's Vision for the Future
Mastercard's shift toward an embedded payment system is expected to be as transformative as the adoption of chip and PIN or contactless payments. The company's technology aims to make online payments as seamless as in-store contactless transactions.
Consumers will be able to make one-click payments across various devices, including smartwatches, home assistants, and even cars.
For example, Mastercard's partnership with Mercedes-Benz allows customers to use a fingerprint sensor in their cars to make digital payments at over 3,600 service stations across Germany. This move exemplifies the potential of Mastercard's new payment system to revolutionize the way we conduct transactions.
From manual card numbers to tokens, we know we will come a long way towards a more advanced system for online payment. Mastercard is here to change how we pay for goods and services in a more modern setting.
