How Tokenization Improves Customer Convenience and Security
Most customers see the positives in storing their credit card information with merchants. The process allows them to arrange recurring payments in advance, so they won’t forget to take care of routine bills and subscription charges or even take advantage of on-demand payments for services and goods. However, storing sensitive cardholder data becomes risky for both the merchant and the customer. Tokenization helps to reduce that risk.
The Payment Card Industry Security Standards Council requires that any merchant accepting payment through its major payment processers must meet specific criteria to be considered PCI compliant. These processors include major credit card institutions, such as Visa, Mastercard, Discover and several others. Because data security is such a priority, compliance for both the software provider and the merchant can sometimes be tricky.
With tokenization, much of the responsibility is lifted from the software provider’s and the merchant’s shoulders. Instead of storing customer specific information, you’re accepting a unique “token,” or code, from the payment provider. That code is useless to hackers. PCI compliance, for both the software provider and the merchant becomes a much easier hill to climb when you’re not storing as much sensitive information.
With PCI compliance comes obvious security benefits for your customers. Tokenization creates an added layer of protection because the payment processor retains access to the customer’s actual cardholder information. Considering that over 13 billion cases of data theft have been reported worldwide over the last five years, it’s clear that protecting financial information is still as important as ever.
According to Forbes, subscription services are on the rise. Many customers prefer a “set it and forget it” approach when it comes to paying for their subscription. Setting up recurring payments saves them from having to login every month and resubmit their billing information.
Using an auto-pay feature requires the merchant to store sensitive customer data. Tokenization makes it possible to keep the convenience for the customer without actually storing the data.
Adding to Tokenization to Your Software
Paragon Payment Solutions can help you add this secure payment technology to your software.
Ready to see our API or open a test account? Looking for more information on our Partner Programs? Are you a merchant with a question? We are here to help!