Mastercard strengthens online payment security credentials, quadrupling tokenised transactions in Australia

• Transactions using Mastercard’s secure MDES for Merchants technology rose 316% in Q2
• 65% of online transactions take place with customer’s card saved on file
• Tokenisation could reduce online payment fraud on Mastercard-issued cards by 30%[1]

Mastercard announced a 316% rise in the number of online transactions secured in Australia using its tokenised payment security technology, Mastercard Digital Enablement Service (MDES) for Merchants, in the past three months[2].

With COVID-19 accelerating the growth of online shopping and digital subscriptions in Australia, the huge increase follows recent research indicating that 65% of online transactions now occur where the customer’s payment details are saved on file[3], putting the onus on retailers to ensure confidential data is protected against potential theft or fraud.

Using a security measure known as tokenisation, MDES for Merchants ensures a customer’s payment data is safely stored and maintained by replacing card numbers with a unique and encrypted digital token. Because these digital tokens are unique to each customer-to-business relationship and card numbers or expiry details are never sent, they cannot be intercepted or stolen.

Additionally, the token can be updated by the card issuer, allowing lost, expired or replaced cards to be automatically updated with the merchant. This creates a better customer experience and significantly reduces the number of failed transactions due to expired card details.

With 30% Australians planning to make more online purchases in the future[4], retailers must ensure their e-commerce platforms protect customer payment data while offering a simple and frictionless checkout experience.

“MDES for Merchants is a game changer for retailers, enabling a smoother and more secure shopping experience while future-proofing their business,” said Surin Fernando, Vice President of Business Development and Digital Product, Mastercard. “By replacing card details with a unique, encrypted and updatable token, retailers can rest easy knowing sensitive data is well protected, while consumers enjoy a convenient checkout experience every time, even if their card details have changed.”

Card-not-present fraud accounts for 86.3% of all payment fraud on Australian cards, costing the industry close to $500 million each year[5]. Leading card issuers, banks and payment service providers in Australia – including Adyen, Datacom, Securepay, eWAY, EzyPay and Fat Zebra – are already using MDES for Merchants and benefiting from an improved dataset to better evaluate the legitimacy of transactions, resulting in a 7.5% increase in approval rates[6] and fewer declines.

Some of the world’s most innovative organisations use MDES for Merchants to secure customer payment data, including leaders in the entertainment, buy now pay later and ecommerce space.

While the technology has the potential to reduce online payment fraud on Mastercard-issued cards by around 30%[7], it also helps retailers to prepare for many new and innovative ways to pay, including IoT and voice commerce. Both are major opportunities for local businesses in the years ahead, with a 2019 study predicting more than four million local consumers will use their smart speakers for shopping[8].

“As technology has evolved, so have the ways we pay for goods and services. MDES for Merchants lays the foundation for the next wave of innovation, allowing more payments to take place anywhere and everywhere. As consumers begin to shop via their voice assistants, smart TVs, cars and other connected devices, now is the time for retailers to ensure their digital storefront is ready for these new ways to engage with their customers,” Fernando said.

 

[1] Mastercard internal research and network data
[2] Mastercard network data, comparing data from Jan – Mar (Q1) to Apr – Jun (Q2)
[3] Mastercard network data
[4] https://newsroom.mastercard.com/asia-pacific/press-releases/in-stores-or-on-the-couch-asia-pacific-consumers-shift-rapidly-to-digital-commerce-and-show-no-signs-of-turning-back-mastercard-study/
[5] AusPayNet payments monitor https://www.auspaynet.com.au/insights/Payments-Monitor/Second-Quarter-2019
[6] Mastercard network data
[7] Mastercard internal research and network data
[8] https://www.cmo.com.au/article/650669/report-voice-commerce-represents-vast-untapped-market-australian-brands/