The post-pandemic e-commerce boom continues at breakneck speed with a sharper focus on costs. Customers continue to expect everything from personalised product recommendations and flexible returns to a frictionless checkout process as part of a seamless omnichannel experience. Delivering this experience is crucial to fostering and maintaining customer loyalty and trust as well as maximising revenue.

To achieve this frictionless, unified experience merchants should consider centralising customer payment data in a secure payment vault to boost authorisation rates and minimise costs. This approach is called agnostic tokenisation.

Harnessing agnostic tokenisation enables merchants to diversify their payment processing structure so they can route transactions for optimal performance. It also means that any outages, technical issues, or changes in PSP policies cause minimal disruption to customers and merchants, whilst helping to mitigate risks.

The growth in tokenisation

Tokenisation is a process by which a Payment Account Number (PAN) is replaced by surrogate values called tokens. Born out of the growing threat landscape and escalating data breaches, tokenisation minimises the amount of sensitive customer payment data merchants need to keep on hand, especially when undertaking one-click checkout. Companies are rapidly adopting tokenisation to increase payment card security, reduce PCI compliance costs, optimise payments, and reduce revenue risk.

However, many companies leverage PSP-provided tokenisation, locking them into a single provider and limiting them from improving payment outcomes by using multiple PSPs.

If a merchant begins with one or two PSPs and decides to switch or add another PSP, this means re-tokenising its customer data or performing a data migration, both of which are time-consuming, costly and a lot of manual effort. Some data can be lost during the migration process and asking long-time repeat customers to provide their data again, such as their card details, is not a good customer experience.

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Company Profile – free sample

Thank you!

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

By GlobalData
Visit our Privacy Policy for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.

Through a centralised payment vault, merchants can change their PSP or collaborate with multiple PSPs, gateways, and other partners without being locked to any specific one. In addition to maintaining control of its customers’ data to continually transact with ease.

Benefits of leveraging agnostic tokenisation

Working across multiple PSPs with agnostic tokenisation enables merchants to access different markets, as well as a broader range of customers and different payment methods. Merchants can negotiate better terms and optimise their payment processing expenses.

Agnostic tokenisation also enables merchants to enhance the customer experience. By working with multiple PSPs, merchants can provide customers with greater flexibility and convenience during the checkout process. In addition, network tokens can be leveraged to ensure the vault remains updated – preventing declines due to card expiration or loss.

Tokenisation also reduces the overall risk of fraud by protecting card details throughout the entire transaction lifecycle as well as reducing false declines. Fraud detection systems are less likely to require blocking a tokenised transaction.

Putting merchants in control

Merchants that are leveraging multiple PSPs without agnostic tokenisation aren’t actually reaping the full benefits of working with more than one provider. This is because once a transaction is routed to one processor, merchants have essentially ‘put all of their eggs in one basket.’ In order to reroute the transaction, customers would need to re-enter their credit card information, adding unnecessary friction and creating poor customer experiences.

On the flip side, merchants leveraging agnostic tokenisation can seamlessly reroute transactions to a different processor – reducing overall costs, improving authorisation rates, and removing friction from the customer.

That said, implementing a multi-PSP strategy requires careful planning, as well as integration of payment gateways, and ongoing monitoring of transaction performance and costs. For many merchants, the benefits of diversification, access to new markets, cost optimisation, and risk mitigation outweigh the challenges associated with managing multiple relationships.

Moving from a reactive to a proactive mode

Managing operations in this way means merchants can become more proactive about using data models to optimise costs, increasing loyalty and revenue. Merchants across Europe should look to fully embrace agnostic tokenisation to create a more connected experience between the merchant, PSP, and customer.

Once merchants have acquired this new-found independence, the next step to optimising cost and operations is to embrace intelligent routing – a topic that I will cover in my next article.

Galit Shani-Michel is VP of Payments at Forter