If there has been one Web3 function that has transcended into the traditional finance world, it isn’t cryptocurrency, it’s tokenisation. 

Mastercard, which has increasingly been adopting and championing tokenisation since 2014, has revealed that by 2030 the e-commerce space will be 100% tokenised. 

The world leader in payments has known better than most that digital payments are now becoming the norm. With this, merchants that require customers to submit sensitive card information are finding that more and more payments are being made online. 

With the proliferation of digital payments and digital wallets expected to continue to take over from cash, enhanced security measures are needed in order to handle the surge in online payments and information that is and will be stored for years to come. 

According to Mastercard, this is where tokenisation comes in. This process substitutes the 16-digit card number of a credit or debit card and replaces those numbers with a series of values that protect customers’ data from any potential cybersecurity or fraud attacks. 

This tokenisation process is proving critical for merchants and payment services alike to protect customers from the increased rise of online payment fraud. 

Mastercard highlighted research conducted by Juniper Research, which stated that losses from online payment fraud are expected to surpass $91bn by 2028. If e-commerce can be 100% tokenised by 2030, losses from online fraud are expected to significantly reduce. 

A more streamlined checkout process

But tokenisation is not just an added layer of security for the merchant and customer, the process enables a more efficient checkout journey without the customer having to do little to no requirements. 

As the tokenisation process is handled by the issuing bank, customers are not required to do anything, removing the friction of manual work. 

Mastercard is seeking to remove manual card entry by 2030 to create a “consistent experience across devices, browsers, and operating systems”. There is an aim by the company to bring the seamlessness of in-person contactless payments to online platforms. 

Jorn Lambert, Chief Product Officer at Mastercard, reiterates this sentiment, viewing tokenisation as the next step in simplifying online and digital payments.  

He said: “As physical and digital experiences continue to converge, we’re pushing the boundaries of what’s possible

“We’re focused on bringing best-in-class digital services together to deliver more value, access and safety to our customers and the end-consumer. We’ll continue to harness the potential of these technologies to deliver enhanced security, better experiences and overall, new ways to pay.” 

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How Mastercard is leveraging tokenisation

The payment network is looking to streamline tokenisation at the checkout further by embedding Click to Pay into merchant sites to enable bank partners to help customers enrol their cards. 

But not settling there, Mastercard is also seeking to integrate payment passkeys for online transactions. This will use an on-device biometric verification system to allow customers to save card information or passwords and perform checkouts at a much quicker and efficient rate. 

Tokenisation is not only a new way to protect customer data, it is also seeking to be the answer for merchants who are struggling to keep up with the amount of payment methods that are being brought to the market today. 

Valerie Nowak, Executive Vice President, Product and Innovation, Mastercard Europe has likened tokenisation as a “win-win-win” for customers, retailers and card issuers, converging to create a harmonised e-commerce experience. 

She said: “In Europe we have seen tokenization gaining momentum across the ecosystem, the convenience and reduced rates of fraud sell themselves. 

“We are confident that reaching this vision by 2030 is a win-win-win for shoppers, retailers and the card issuers alike.” 

Tokenisation, due to its association with blockchain technology, may incite consumers to throw their guard up due to the unknown nature of what it is, but they may not need to know. 

Without having to intervene in the process, customers are able to pay for goods and services seamlessly, with the automated process not being that much of a burden for the issuing bank and merchant either. 

With one of the largest payment companies in the world boldly claiming that all e-commerce will be tokenised by 2030, it stands to reason that this could be a formality once the time arries six years from now.