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LONDON — The experience of paying for products and services online could feel very different in the coming years.
From 2030 MasterCard will no longer require Europeans to manually enter their card numbers when paying online, regardless of which platform or device they use.
Mastercard will announce in a fireside chat with CNBC on Tuesday that by 2030, all cards it issues on its network in Europe will be tokenized.
In other words, instead of the 16-digit card number we are all used to using for transactions, this will be replaced by a randomly generated ‘token’.
The company says it is working with banks, fintechs, merchants and other partners to phase out manual card entry for e-commerce in Europe by 2030, in favor of a one-click button on all online platforms.
This will ensure consumers’ cards are safe from fraud attempts, Mastercard says.
Users won’t have to enter passwords every time they try to make a payment, as Mastercard is introducing passkeys that replace passwords.
It will also enable customers to make one-click payments at checkout using fingerprint biometric authentication.
Cards stored via tokenization on a merchant’s page or in an electronic wallet can be automatically updated wherever they are stored when replaced or renewed.
Reducing fraud
Mastercard says 100% tokenization on e-commerce sites will dramatically reduce fraud rates.
According to market research firm Juniper Research, losses from online payment fraud are expected to exceed $91 billion by 2028 – for a total of more than $362 billion worldwide over the next five years.
Adoption of tokenization has increased by 50% every year, according to Mastercard, and now secures approximately 25% of all e-commerce transactions worldwide through its network.
Mastercard said it is making the change in Europe because the continent has long been a leader in payment innovations such as contactless payments and online banking, which have allowed bank users to share their account details to access new financial products.
“In Europe, we have seen tokenization gain momentum across the ecosystem, the convenience and lower fraud rates selling themselves,” Valerie Nowak, executive vice president, product and innovation at Mastercard Europe, said in a statement.
“We believe achieving this vision by 2030 will be a win-win-win for shoppers, retailers and card issuers alike.”
Future of payments
From the advent of credit cards for the first time in the 1950s and 1960s to the shift to paying for things online that came with the widespread adoption of the Internet in the early 2000s, the ways we pay have evolved over the years. undergo quite dramatic changes. the decades.
In the early days, when credit cards were first introduced, bank tellers would check card numbers against a book of invalid numbers or call the issuing bank to make sure the person making the payment was who they said they were.
So-called “zip-zap” machines that would print card numbers on carbon paper packets were the main method of paying via credit card at the cash register.
That was until the 1970s and 1980s, when magnetic strips and electronic payment terminals took over.
They were followed by cards with microchips that stored data about the card’s owner, number and expiration date.
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Mastercard is betting that the move to this new ’embedded’ payment system will be as dramatic a shift as the move to chip and PIN, or the adoption of contactless payments, now widely used in developed economies around the world .
The company says its technology will make the experience of paying for items online as smooth as making a contactless payment in-store. It says this means consumers can make one-click payments on any device, including smartwatches, home assistants and even cars.
For example, Mastercard has a partnership with Mercedes-Benz that allows the automaker’s customers to use a fingerprint sensor in their car to make digital payments at more than 3,600 gas stations across Germany.