Tokenization Stirs Thoughts on Top of Wallet

by Tim Sloane 0

This article posted on the Fiserv website suggests financial institution start to think about how they will remain top-of-wallet in the age of tokenization and suggests they start by updating its card structure to support tokenization:

“With the launch of Apple Pay™ and changes to other mobile wallets, consumer interest in mobile payments is accelerating. Just as Apple Pay and others solve for ease of use with frictionless mobile payments at the point of sale, tokenization helps ensure those payments are secure – and keeps your financial institution central to the consumer payments experience.

To make sure consumers are using your financial institution’s card for mobile payments, make it as easy as possible for consumers to add their cards to apps. Ensuring your cards meet requirements to be used through these services is just as important. In the case of Apple Pay, a card has to have tokenization capabilities to be used through the service.”

The article then identifies the increased consumer usage of mobile and tokenization of merchant cards on file, to indicate how quickly momentum is growing and suggests that financial institutions need to act in order to protect their payment revenue stream:

“To keep your financial institution visible to customers and retain a revenue stream from the interchange, ensure your card is a consumer’s card of choice for mobile wallets and apps throughout these coming developments. The good news? Consumers continue to trust their bank or credit union to facilitate new and emerging ways to pay. According to Mercator Advisory Group, 45 percent of credit card holders, especially the young and mobile-enabled, most often use a card issued by their primary financial institution.

As consumers warm up to a new way to pay, position your financial institution to leverage this mobile payment method to retain and attract customers, and enhance adoption of mobile services and the consumer experience. To rule the wallet, be the card that consumers can use securely anywhere, any time and any way they want to pay.

It is rare that a issuing processor understates the case for a new product, but that appears to be the case here. Adding payment credentials into cars and appliances are years away, but this proliferation of credentials will have a profound impact on payment systems, online banking and mobile banking infrastructure. Financial institutions sould be planning for that future now, since the changes required to address this new environment will take several years to roll out.

Overview by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group

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