New Zealand payment firms roll out new technology to reduce fraud

Payment firms in New Zealand have committed to rolling out the new payment technology credential-on-file (COF) tokenization to strengthen e-commerce security and enhance conversion rates.

Adyen, Bambora, Cybersource, Paystation by Trade Me and Windcave said they plan to introduce tokenization in the country, in partnership with Visa, which will not only reduce fraud but will also enhance conversion rates, resulting in savings for businesses and simpler payment experience for every-one that shops online.

COF tokenization replaces card details such as account numbers and expiry dates with unique digital identifiers (‘tokens’) that are used for payment without exposing a cardholder’s sensitive information.

Each token is merchant-specific, so it can only be used with the merchant where it is stored, removing any incentive for hackers to try to steal the account data and decreasing the risk of data breach attempts.

Businesses usually store card numbers for direct debit, top-up, loyalty, subscription or account-based online shopping. This same technology is used to enable the various mobile wallets that are available to Kiwis today.

Riaz Nasrabadi, Visa’s head of Product for New Zealand and the South Pacific, said this commitment to drive tokenization across the industry represents a win for New Zealand businesses, consumers, financial institutions and payments companies alike.

“The technology enhances consumers’ experience, enables retailers to retain consumer loyalty and protects all businesses from fraud,” Nasrabadi said. “With the advent of open data and the creation of new experiences based on data, initiatives such as tokenization will ensure consumer data is protected and held securely.”

According to Visa, in addition to enhancing security, COF tokenization enables businesses to have consumer payment details instantly refreshed when a card is lost, stolen or expires, meaning there is no need for the consumer to log in and update his or her details, or the business to lose out on that payment cycle.

“This development will be welcomed by Kiwi consumers, with a YouGov survey finding that 44 percent identify updating pre-existing details with merchants and service providers among the most annoying consequences of losing a card or having it expire,” the company said.

The automated process could also help prevent online merchants from missing out on subscription renewals, with 19 percent saying they would use the manual card update to try out an alternative, and 13 percent opting to stop using a service altogether.

According to Visa, with tokenization in place protecting their card details, 37 percent of New Zealanders said they would be more likely to purchase from small retailers, 46 percent would be more trusting of online businesses, and 36 percent said they would buy from retailers they had not bought from in the past.