Mastercard: Tokenized Payments Turn Make-or-Break Checkout Moments Into Sales

Seamless checkout is a winning mantra for retailers looking to capture sales and delight their customer bases.

Customers largely expect a fast, secure and intuitive checkout process. However, hurdles remain, and a seamless checkout isn’t always as easy as click-pay-done.

“Despite the shift to digital payments, barriers still exist, creating a poor experience for both customers and retailers,” Jennifer Marriner, executive vice president of global acceptance solutions at Mastercard, told PYMNTS.

One of the primary friction points? Fraud is gumming up the works.

Online fraud rates are roughly eight times higher than those for in-person transactions, Marriner said. This creates financial loss for merchants and card issuers. Many fraud mitigation steps, such as complex passwords and one-time passcodes, often introduce additional friction to the checkout process.

For businesses, getting the checkout experience right can help to increase conversion rates and reduce fraud. For consumers, it can mean the difference between intending to purchase and completing the transaction.

How Retailers Can Enhance Online Experiences and Drive Loyalty

Whether they’re well-established pure plays, hybrid retail powerhouses or startups looking to sell online, retailers can enhance user satisfaction and foster long-term loyalty by prioritizing ease of checkout and incorporating customer feedback.

“Around 27% of carts are abandoned because the process is too complex and slow,” Marriner said.

For merchants, each abandoned cart represents a lost opportunity, underscoring the need for streamlined processes that improve conversion rates without compromising security.

The rise of mobile commerce introduces new challenges and expectations. Consumers rely on mobile devices for purchases, valuing speed and convenience. However, the variability of mobile experiences, affected by different devices and browsers, can lead to frustration.

“Every interaction feels different, creating a fragmented experience for the customer,” Marriner said.

Modern consumers look for individualized interactions and assume that merchants will anticipate their preferences, expecting that their preferred payment methods, saved sizes and other personal details will be readily available.

To this end, Mastercard acquired Dynamic Yield, a company specializing in personalization through artificial intelligence and machine learning, which offers tools for creating individualized customer journeys. With capabilities to recommend products and services based on past interactions, Dynamic Yield helps merchants increase conversion rates and enhance customer loyalty through tailored experiences.

This approach leads to a satisfied customer who feels valued and a merchant who benefits from increased loyalty and higher sales. It’s a “win-win” scenario, Marriner said.

Still, the growing array of available payment methods, including traditional card payments, digital wallets and buy now, pay later options, has introduced more complexity to the mobile checkout experience. The payment industry must remain focused on enhancing security while reducing friction, Marriner said.

“We’re committed to making checkout faster and more secure, especially by minimizing manual entry, leveraging tokenization and employing biometric authentication,” she said.

The Growing Role of Tokenization in Streamlining Checkout

One promising approach to improving online checkout security and efficiency is tokenization, a process that replaces sensitive card information with a unique identifier, or token, that is used only for that transaction, she said. Tokenization can reduce the risk of data breaches, as the token is useless to fraudsters if intercepted. Mastercard is championing tokenization as a default practice, raising the bar for security for consumers, merchants and card issuers.

Another essential component of streamlined checkout is the option for customers to store card information securely on file, reducing the need for manual entry.

With additional tools from Mastercard, like Click to Pay, consumers can skip manual entry altogether, speeding up checkout and lowering the likelihood of abandoned transactions.

Merchants have an extensive ecosystem of payments technology available to choose from when selecting a partner to enhance their checkout experience.

“If we were having this conversation years ago, it would be simpler,” Marriner said.

Now, the decision requires consideration of the business’s internal resources, desired payment options, and the specific fraud prevention tools best suited for their customer base.

Merchants must assess their in-house capabilities and decide whether to develop their payment solutions independently or rely on a third-party partner.

“They have to think about features and functionality such as payment options, fraud prevention tools and customization, they also need to consider the support they will receive, and finally how easily the solution integrates with existing systems like inventory management and loyalty programs,” Marriner said.

Comprehensive support is essential for businesses operating 24/7, ensuring they have access to assistance whenever needed.

Payments are evolving quickly, and retailers need proactive strategies to keep pace. Partnering with reputable brands and technology providers is essential to stay ahead. Consumers expect a seamless integration of online and in-person shopping experiences, where data flows smoothly across channels, creating a unified view of the customer. Retailers must invest in technology that enables this kind of integration, while also placing a premium on security.

As Marriner concluded, building a secure and positive checkout experience requires collaboration within the payments industry.

“A rising tide lifts all boats,” she said, underscoring that industry-wide investments and improvements benefit everyone, creating a stable foundation for future growth.

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