Billions of retail profits, up to a staggering $165 billion over the next decade, could potentially be lost over one single hiccup in the online payment process – declined payments.
A PYMNTS Intelligence report on network tokenization in the e-commerce industry reveals a startling statistic: 35% of cardholders will abandon a merchant after just one card decline.
The report, created in collaboration with Spreedly, also highlights the importance of ensuring your shoppers have a smooth payment experience. Consider the competitive landscape, for example, and how easy it would be for your customers to choose another merchant.
Declined payments a billion-dollar blunder
It’s easier than ever for shoppers to fall victim to online fraud.
With card fraud losses set to reach a staggering $165 billion in the next decade, retailers really can’t afford to have declined payments interfering with their bottom line.
Unfortunately, a single failed transaction can mean more than just a lost sale. It could mean losing a customer for good.
The stakes are even higher for subscription-based businesses. As per the report, if even 1% of payments fail due to outdated card information, a $10 monthly streaming service with one million subscribers could lose $100,000 per month.
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But there’s an easy way to get around the declined payments hiccup – network tokenization.
What is network tokenization
Network tokens are generated by major card networks like Mastercard and Visa. This tech offers an advantage over traditional security measures by concealing card details throughout the entire transaction process.
It essentially includes a unique cryptogram for each transaction which provides an additional layer of protection against fraud.
The benefits are clear:
- 26% average reduction in fraud.
- 2.1% improvement in authorization rates.
- Continuous updating of the payment information.
ALSO READ: What do customers really want? Companies that prioritize data protection
How can retailers use network tokenization?
There are a few ways retailers and online stores could adopt network tokenization to reduce the risk of card declines.
Going this route will also streamline your business’s compliance with payment industry security standards.
Some of the ways to implement network tokenization include:
- Partner with a Payment Service Provider (PSP) that supports network tokens.
- Become an authorized token requester with major card networks.
- Integrate network tokenization into your existing payment flow.
It’s also vital to educate your employees on the benefits and use of network tokens. In addition, you’d want to monitor and analyze the impact this has on declined payments, authorization rates, and fraud reduction.
By doing this, retailers can reduce the risk of declined payments while also ensuring compliance with payment industry security standards.
In short, network tokenization is a win-win solution: enhanced security for customers and improved financial performance for businesses.
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About the author
Cheryl has contributed to various international publications, with a fervor for data and technology. She explores the intersection of emerging tech trends with logistics, focusing on how digital innovations are reshaping industries on a global scale. When she's not dissecting the latest developments in AI-driven innovation and digital solutions, Cheryl can be found gaming, kickboxing, or navigating the novel niches of consumer gadgetry.
