Master Card pushes for changes in digital payments in Europe; here are the details and the impact of this move

Master Card has announced a major change to its digital payments system in Europe and this is expected to affect millions of customers. The company which is the second largest payment network in the world has announced that all digital payments shall be 100% tokenized by 2030. Master Card introduced this system in 2014 and it now accounts for over 25% of all digital payments around the world. The new system seeks to move towards ensuring digital security of the card holder, ensuring ease of payments and also ensuring easier management of card systems. This has been reported by the Mirror.

What does it entail?

Ever card that is used by the consumer for digital payments has 16-19 unique digits which is its card number. The user has to key in these details in certain types of digital payments such as e-commerce transactions, in app transactions on Apple and in other instances. Tokenization removes the need for this. Tokenized cards or tokens would simply replace this with an alternate card number or a ‘token’ to speed up the transactions. This will now be used for e-commerce payments, in-app purchases and other online payments.

Advantages:

There have been numerous cases of debit and credit card fraud payments that have been reported in the UK. The country lost 2.3 billion pounds in 2023 due to fraudulent payment transactions, according to accounting firm BDO’s latest Fraud Track Report. This tokenized system seeks to secure the money of the depositor.


Further, the ease of payments will also increase. Valerie Nowak who is the executive vice-president of product and innovation at Mastercard Europe said that this will benefit the shoppers, retailers and other stakeholders as it will reduce the rate of fraud and ease the convenience of payment.

Concern:

There will be logistical costs over a period of time as consumers move towards tokenized payments and companies will have to evaluate as they move forward. Another concern that has emerged is the issue of security. While tokenized payments do help in curbing digital payment frauds, many consumer rights experts also point out the need to ensure that the data is stored safely and securely. This will ensure that the details of the users are not compromised.

FAQs:

Will Master Card’s switch to tokenized payments lead to any immediate inconvenience to the depositors?
This plan to achieve 100% tokenized payments will be done over a period of 6 years till 2030. Further, there will be no immediate inconvenience and the depositors can get their tokens at their convenience.

What is the expected growth of tokenized payments in the world?
Tokenized payments are expected to breach the 1 trillion-mark by 2026. This has been estimated by Juniper Research. According to them in 2022, there were 680 billion tokenized payments.