Decoding the impact of network tokenization and lifecycle management updates on authorization rates

The payments landscape is continually and rapidly changing; businesses need to prioritize payment security to help drive authorization rates and deliver seamless checkout experiences. Network tokenization is an essential solution for meeting those goals.

Using network tokens can help you protect customer information and increase conversions. Still, network tokens aren’t unchanging. It’s critical that they receive lifecycle management updates to keep vaulted credentials fresh and further help reduce declines.

Explore how network tokenization and lifecycle management can help you drive authorization rates, and learn how to get started with PayPal Braintree — one of the largest token service providers in the world.

The critical role of authorization for enterprises

Efficient and secure authorization is paramount for enterprise business success. The more payments you can authorize quickly and securely, the more sales and revenue you generate. On the other hand, poor authorization processes can lead to false declines, increased risk of fraud, and frustrated customers. One study found that 44% of falsely declined shoppers stopped or reduced shopping with that retailer.1

For a refresher, authorization rates measure the percentage of transactions that are successfully approved. So, if your business receives 700 approvals out of 1,000 attempted transactions, your authorization rate would be 70%. In other words, 30% of your transactions were declined or failed to process successfully, costing your business valuable sales.

Businesses can use a range of authorization management strategies to improve authorization rates. First, they can work to understand the reasons why transactions are declined – such as insufficient funds or outdated customer information. They can then optimize the checkout process to address these issues – for example by securely storing and updating customer data.

That’s where network tokenization is instrumental to a smooth and secure customer experience.

Network tokenization: Elevating enterprise security

Network tokenization has quickly become an effective and secure way to transact online. With this enhanced security solution, customers’ credit card numbers are replaced with unique encrypted tokens.

Each time a customer checks out, the token that represents their credit card number is used to process the transaction, removing the need to enter and expose the card number. This extra layer of protection makes it difficult for fraudsters to intercept and access customer’s payment data.

Network tokens are also specific to each business. So, a network token that works for one business won’t work for another, making this solution more secure than static card numbers, which can be stolen and used across a variety of businesses.

Lifecycle management updates: Ensuring vigilance

Lifecycle management is the process of updating network tokens with the latest payment information, data, and credentials – and it's critical to optimizing network tokenization security.

For example, a customer’s credit card expiration date or billing address might change. Lifecycle management capabilities empower payment processing platforms to automatically check for and execute these updates. Businesses don't have to spend time tracking down new information and customers don't have to manually enter their information at checkout.

These automatic updates can help reduce lifecycle management declines — which can occur due to lost, stolen, inactive, or outdated cards — and increase conversions.

Security advancements with network tokenization

Network tokens can help improve enterprise security and fraud management, helping prevent malicious actors from stealing and sharing credit card details. Network tokens also carry a lower interchange rate in certain markets, lowering costs for businesses to process transactions with tokens vs. actual credit card details.

Using a secure vault with tokens can also help businesses meet Payment Card Industry (PCI) compliance standards for the safe processing of customer payments.

Streamlining authorization processes for enterprise efficiency

Network tokenization can improve enterprise efficiency by streamlining authorizations and reducing friction at checkout. Since each shopper’s payment information is automatically stored and updated, customers can easily make repeat transactions in just a few steps.

Lifecycle management updates can also help reduce false declines and cart abandonment, ultimately increasing conversions and sales.

Adopting network tokenization

Businesses can work with their payments network or processor to implement network tokenization. Since every business and customer base is different, it’s important that you develop solutions that are tailored to your specific payment flow. If you offer subscriptions or have many repeat customers, for example, you should enable lifecycle management updates to automatically refresh card data.

You’ll also want to check that your network tokenization solution can:

  • Tokenize cards stored with another payment service provider or vault
  • Tokenize cards for customers in your target markets across the globe
  • Provide real-time data about which transactions used tokenization, so you can better understand customer experiences and security risks and optimize checkout going forward
  • Work directly with card networks to automatically update expired or canceled network tokens

The critical role of regular lifecycle management

Effective lifecycle management can also help you become compliant with industry regulations and know that you’re using the latest tokenization security measures.

Future trends and innovations

As payment technology continues to evolve, enterprises will need to find more-innovative ways to increase security and authorize payments at scale.

Alternative payment methods such as digital wallets, cryptocurrencies, and QR codes are becoming more popular. Shoppers are also using buy now, pay later apps and social media commerce tools for convenient and accessible purchasing. Artificial Intelligence and machine learning are streamlining customer experiences and helping businesses identify fraud earlier.

Enterprises should keep an eye on these evolving trends and ensure their payments processors have the tools to adapt to an ever-changing commerce landscape.

How businesses use Braintree to keep vaulted cards and credentials fresh

PayPal Braintree is one of the world’s largest token service providers. Having tokenized more than 1 billion cards, Braintree delivers the scale and experience needed to optimize any business’s payment flow.

Braintree network tokenization has the power to help reduce fraudulent transactions, improve customer security, and streamline the checkout experience. In fact, PayPal has shown it can help increase authorization rates by 4.8 percentage points for merchants.2

While network tokenization can be complex, implementing Braintree is simple, helping you quickly start to optimize your enterprise authorization processes. Once implemented, Braintree can help businesses keep vaulted credentials fresh with two distinct solutions:

  • Network tokenization implementation: The process of exchanging cards stored in a business’s vault with like-for-like, encrypted tokens.
  • Lifecycle management updates automatically refresh network tokens.

Using both solutions broadens the number of cards updated in the vault, increasing the chance that a card will be fresh at checkout time.

Improve your payment security with network tokenization

Network tokenization lifecycle management is essential for driving authorization rates and improving customer experiences. Especially as payment methods and technologies continue to evolve, businesses must have effective platforms in place to help enhance payment security, prevent fraud, and reduce declines at checkout.

Braintree is a leader and innovator in payment authorization, operating one of the largest token vaults in the world. With Braintree to power your payments, you can better protect customer information and increase revenue — automatically keeping data fresh and up to date for more-seamless checkout experiences.

Learn more about authorizing payments with PayPal Braintree.

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