A perspective on payments, people and data in 2016 (and a farewell to tokenization..?)

It's a confusing time for merchants. Apple Pay, PayPal, tokenization, card vaulting if you will, digital wallets, PCI compliance, interchange, mobile, desktop, fraud, chargebacks, mitigation, gateway, processor, POS... The list goes on and on and on. 

From a consumer perspective, I'm pretty sure they really don't care or think about any of the above, and nor should they. 

There is an almost limitless variety on how you can structure your business from a payments perspective, balancing the cost vs fraud/ease of use/availability. Understanding of your customers today, and the type of customers you wish to acquire is key to your ecommerce strategy, and in turn payment strategy. What are they doing? When and how are they buying? What other payment tools are they becoming familiar with in their everyday lives (Venmo and iMessage anyone?). As a retailer, you need to incorporate yourself into what they are doing day to day. This does not mean bending over backwards and catering for all, it just means that being in the right place at the right time isn't enough. You also have to ensure your audience are willing and able to transact with you, on their terms. Let's look at tokenization for example. 

Tokenization is the storing of a card number on a secure (PCI Level 1 compliant) server, often with a payment gateway/platform, converting the card to a 'token' and returning the token to the retailer along with the last 4 digits of the card and the expiry date. The retailer can then store this data (as a stored token is not in breach of PCI), attach it to a customer account the enabling repeat customers to select their own card details on the payment page for future purposes. Sounds great doesn't it? 

Tokenization was the darling of the payments industry in the late 2000's. It was expensive, at times complicated and made merchants very sticky to their payment gateway/processor. Fast forward 6 years or so, and we have to ask - is this still what consumers (you and I) want? Aside from Amazon, Apple and various subscription models, when did you last store your card with a merchant?

Nope? I can't remember either. Guest checkout? Yes please. Card data stored on browser, sure why not! Available on both desktop and mobile? Fantastic! Uber, Lyft, Airbnb? Thanks Apple Pay. Apple Pay coming to desktop soon? What the what?! Technology has changed vastly over the last 10 years or so. More than any time before and faster than ever in the ecommerce world. It's possible to build out a comprehensive payments solution that speaks to your audience without overcomplicating or overspending anymore. If you're a retailer and not the likes of Amazon or Apple, I'd say tokenization is not going to be fundamental to your business. 

To this effect, the top three retailers on a single platform in the US - Amazon, Apple and eBay have all monetized this payments infrastructure (Amazon Payments, Apple Pay, PayPal). I'm sure if you're reading this, you're likely to have at least one of these accounts yourself, if not all three. You probably also know that you can also use these accounts in most places (collectively) to shop with other retailers. As a merchant (audience dependent) you should probably take advantage of this existing infrastructure. 

So goodbye tokenization, but hello to understanding your customer, and what tools they have available to them today. The Internet, mobile devices and access to data has made the consumer more powerful than ever. We know we have to treat them all as individuals from a marketing perspective and now is the time to use that consideration for transacting. After all, without the purchase all else is for nought.