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Visa Inc. says the 10 billion tokens it’s issued since 2014 are just the tipping point, as it expects Visa’s tokenized transactions to grow exponentially over the next several years. Visa announced the 10-billion milestone Tuesday.
As of April, 29% of all transactions processed by Visa used tokens. Tokenization uses a cryptographic key that replaces sensitive payment data, such as that found on credit and debit cards, and that can be embedded into any device. Perhaps best known as a critical component of mobile-payments apps like Apple Pay and Google Pay, tokens have made their way to vehicles for in-car payments. Visa’s 1 billionth token was issued just in 2020. More than 8,000 issuers have enabled Visa tokenization, the network says. And in the past 12 months, more than 1.5 million e-commerce transactions use Visa tokens every day, Visa adds.
“We aim to make as many transactions tokenized as possible and are continuing to invest in increasing our token penetration today and in the future,” a Visa spokesperson tells Digital Transactions News by email. “We expect the percentage of Visa’s tokenized transactions to grow exponentially over the next several years. Our 10 billionth token milestone is just the tipping point. Digital commerce continues to grow, and we’re seeing incredible demand from merchants who see the value of this technology for their businesses.”
Visa also touts that tokenization caused a six-basis-point increase in payment approval rates globally and has helped reduce fraud by up to 60%. Visa’s tokens can be processed over other networks.
Visa also is employing tokenization as part of its newest service, the Visa Flexible Credential. This service enables consumers to access multiple accounts via a single credential. “The Visa Flexible Credential lets consumers choose how they pay with a single card – whether that’s debit, credit, installments, or more. Consumers can also preset their choices. For example, by creating a rule to pay with credit for purchases over $100. This is all compatible with tokens behind the scenes,” Visa says.
Visa isn’t alone in adopting tokenization as a security measure and a way to drive digital-payments growth. American Express Co. has offered tokenization and related measures since 2015. That same year, Visa and Mastercard Inc., which also launched a tokenization capability in 2014, signed a reciprocity pact that lets each access the other’s tokens. Tokenization is also critical for mobile payments using a smart phone.
