Payment tokenization reduces online payment fraud, protects cardholder data from cyberattacks, and has numerous benefits for businesses. Banks such as DBS presently provide trading services between four fiat currencies (SGD, USD, HKD, and JPY) and four well-known cryptocurrencies: Bitcoin, Ethereum, Bitcoin Cash, and XRP. This allows a company to gain additional benefits and become more versatile in using digital tokens.
Here are some of the most significant benefits of payment tokenization.
Aids in the development of consumer trust
As previously said, one of the essential benefits of payment tokenization is security, which assists businesses in establishing confidence with their customers. Even though online payments are increasing, particularly since the global epidemic kept millions of people at home purchasing online, many people still do not feel safe making online purchases.
Tokenization assures proper data structuring and transfer, making it less vulnerable to cyberattacks and payment fraud. This contributes to the security of online transactions for both customers and businesses, building trust and a positive reputation in the long run.
Avoids costly fines and revenue loss
The prevention of revenue loss and hefty penalties imposed by various institutions ranks second on our list of payment tokenization benefits.
According to the preceding figures, compromised security has a negative impact on the reputation of a business that has been involved in a data breach. This frequently results in direct revenue loss for businesses as customers migrate to competitors that take better care of their payment data.
Unfortunately, this isn’t the only way for businesses to lose money after a data breach. They may also face costly lawsuits, particularly if the breach has compromised the sensitive information of thousands or millions of people.
One well-known example is the video-conferencing platform Zoom, whose income increased 376% after the global pandemic forced all meetings to be held online. However, following a series of cybersecurity breaches, including a false claim of end-to-end encryption, the corporation was forced to set up an $85 million fund to pay monetary claims to US users.
This ranged between $15 for non-paying users and $25 for those with paid subscriptions. In addition to the fund, Zoom was ordered to pay $21 million in legal fees, according to the judgment.
In addition to lawsuits and direct income loss, businesses that suffer data breaches or fail to comply with the PCI-DSS standard for payment security may face penalties from financial bodies. Non-compliance with PCI can result in credit card issuers levying monthly fines ranging from $5,000 to $100,000.
Suppose a firm suffers a breach in which credit card information is compromised. In that case, it may face various penalties, including fines of $50-$90 per cardholder whose data was compromised and the termination of the company’s relationship with the bank or payment processor.
Enhanced internal security
Improved internal security is another of the benefits of payment tokenization.
Companies ensure external and internal protection, including employees or other people related to their business, because the token is virtually unreadable by anybody other than the payment processor.
Supports recurring payments
One of the most significant benefits of payment tokenization for businesses is taking recurring payments and alternative payment methods in a secure environment, easing subscription-based procedures. Indeed, tokenization is a game changer in terms of securing recurrent payments. On the one hand, subscription-based services are rising; according to SAP Insights, subscription models will account for 53% of all software sales in 2022.
An increasing number of individuals are turning to online shopping for everyday things. They increasingly prefer to save their payment information to make these purchases faster and more convenient.
Tokens and digital payment token exchange are excellent ways for businesses of all sizes to rocket themselves into the future of capital markets while simplifying the market procedure. Visit your banking partner to learn more about the digital payment token and exchange.