A new report from Token ID, A Visa Solution, outlines in detail why Payment Account Tokenization (PAT) is essential to the future of payments.
As the global economy digitises, the new report from Token ID argues that PAT will help to reduce fraud and improve authorisation rates while enabling the exchange of rich transaction data between banks engaged in the transaction process.
The world goes digital in an instant
The report, entitled “Opportunities, risks and trends in a new payments world” shows how cash continues to decline in the face of growing digitalisation, with cash use worldwide down by 4% in 2022 and 20% since 2018, according to McKinsey[1].
Meanwhile, Forbes Advisor reports[2] that e-commerce (whether by laptop, tablet or mobile device) will constitute 20.1% of all global retail sales, with growth of 8.6% between 2023 and 2024.
As this shift from cash continues, a separate phenomenon – the rise of instant payments – is happening.
Data Bridge Research[3] say instant payments are projected to experience a 29.1% compound annual growth rate between 2022 and 2029, with instant payment schemes such as FedNow and The Clearing House’s Real-Time Payments (RTP) in the United States representing one of the most significant milestones in payment methods for decades.
New opportunities – and risks
As customer expectations of instant service delivery grow, the report demonstrates that banks will face new risks, including the emergence of fraud types specifically linked to instant payments.
These include Account Takeover (ATO) and Synthetic ID, as well as fraud relating to Authorised Push Payments (APP), in which criminals dupe consumers or businesses into sending money to an illegitimate bank account.
According to Resistant AI[4], APP fraud accounts for 75% of all digital banking fraud by value, with losses in the US, UK and India set to double by 2026to reach $5.25 billion.
At the same time, capturing rich transaction data and using that data not just to identify and prevent fraud, but also to better understand customer spending habits and patterns could open up new opportunities in terms of more personalised, relevant product and service offerings, improved client communication and other benefits.
Token ID’s new study also explains how PAT can improve authorization rates and help to reduce fraud – while also enhancing real-time payments with rich transaction data that is shared between banks as part of a robust, multi-factor security solution.
Learn more about the role of PAT in securing an instant future: download the new report from Token ID, a Visa Solution, now.
[1] McKinsey & Co, 18 September 2023: “Global Payments Report 2023”
[2] Forbes Advisor, 28 March 2024: “35 eCommerce statistics of 2024”
[3] Data Bridge Research, September 2022: “Global Faster Payments Market – Industry Trends to 2029”
[4] Fintech Global, 10 August 2023: “Is APP fraud the biggest threat to FinTechs?”
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