Louise Ayala-McCarthy, Director of Project Delivery, Transact Payments writes for Payment Expert on the importance of tokenised payments within the modern space and why they can boost engagement for a wide range of sectors.
It’s long been the way in financial services that many of the best innovations start out in the consumer space before making their way through to the potentially more rewarding corporate sphere.
One area where we expect to see this template once again being adhered to is in the tokenised mobile payments space, where enabling employees to make payments through a mobile device would undoubtedly bring convenience and drive efficiencies for thousands of businesses.
While most large corporations have advanced card programmes that allow them to issue payment cards to staff — and smaller businesses now having increased access to these services — they still rely on employees carrying around a piece of plastic with them in order to facilitate these transactions. Moving these cards into mobile wallets is surely the next logical step.
Mobile is the safest and best way to pay
In a world where we are becoming increasingly reliant on our mobile phones to perform essential work- and leisure-related tasks, carrying our wallet or purse around with us at all times seems outdated. “Your phone is your everything now,” declared the Wall Street Journal back in September 2021 and with people now ultra-conscious of spreading germs few of us want to touch payment terminals or handle cash and coins if we can possibly help it.
According to the UK Payments Market 2021 report there were 17 million people in the UK registered to make mobile payments at the end of 2020 and this number is continuing to grow, accelerated by the pandemic. It is now possible to make contactless payments of up to £100 in the UK without entering your PIN, though mobile platforms such as Apple Pay and Google Pay don’t have an upper payment limit when authenticated by fingerprint or facial recognition technology.
Mobile wallet use cases for business users
It’s increasingly clear that people don’t want to take their wallet or purse out when they go out for dinner, to the cinema or a night on the tiles – so why would they want to take it to work with them? There are many areas where the tokenisation of business payment cards could make a positive difference for users and for some businesses, taking a mobile-only approach could actually significantly save on costs.
For example, think of a business with a fleet of vehicles that moves goods around the world. Drivers may be using their phones to map their routes, to communicate with head office, to handle paperwork necessary for crossing borders and so on. The business may even use drivers’ mobile devices to track their location and movements. A physical card that the driver may accidentally leave back at base, lose, or forget the PIN for isn’t nearly as convenient as a phone — which is already performing multiple functions for the driver and can be activated by biometric means — when making payments.
Thinking ahead, tokenisation also offers the possibility of utilising wearable devices as well as mobile phones. Imagine, then, a workforce that could have their health and activity monitored by a Fitbit- or similar-type device which could also be used for making payments quickly and easily.
Hurdles to tokenisation
The introduction of tokenisation in 2015 transformed the consumer payment space, with digital wallets quickly becoming ubiquitous. But just because they are everywhere now doesn’t mean that tokenisation is a quick and simple process. It’s a time-consuming and resource-intensive project that will need to be closely managed to achieve within a reasonable timeline.
There is also the issue of getting the necessary permissions and approvals. Card programme managers might want to tokenise on the Apple Pay platform, for example, but that doesn’t necessarily mean that Apple wants the same thing. There is a long list of criteria that they will need to meet before they can get approval from Apple, and they will face similar hurdles when it comes to Google Pay and Samsung Pay too. Another crucial factor to consider is location, as tokenisation costs can rise as geographical reach spans multiple country ranges.
But while the cost of embracing tokenisation might be a major stumbling block for many businesses, on the flip side of this coin is the question: What is the cost of not embracing tokenisation?
Card payment innovations such as the magnetic strip and Chip-and-PIN brought a great deal more convenience to end users when they were introduced, and soon all customers were demanding that their bank provided these features too. Tokenisation will follow the same pattern — everyone will expect to be able to pay with their mobile device, whether they are making a personal or business purchase. The institutions that don’t enable this feature will inevitably lose out to competitors that are further ahead with their tokenisation strategy.
Why should tokenised payment services be the preserve of the consumer market? The B2B market is ripe for tokensation, with forward-thinking businesses beginning to demand higher standards and better features from their payment partners. Corporate employees are consumers as well, and need access to the same convenient and flexible payment solutions that they use when they’re off the clock. In fact, as a business user I would be expecting more convenience and flexibility from the services I use in a business sense. It’s up to financial service providers to meet these expectations — or lose out.
