Today, more businesses are interacting with their customers online, as customers become less reliant on physical interactions in brick-and-mortar offices. In line with the changing times, financial institutions and other payment service companies continue to devise newer ways for businesses to receive payments digitally.

Digital payments typically involve the input of crucial customer data and sensitive card details that can easily be exposed in the event of a breach. Therefore, the rise of e-commerce and online payments has seen an increase in identity theft and other forms of cyberattacks that have continued to leave vulnerable victims biting their fingers in regret. This has informed the need for the development of a robust payment system that ensures the protection of customers' data.

Thankfully, a high percentage of the risks associated with online payments have been addressed with tokenization, a security technology that ranks high for its ability to enhance customers' experience while also facilitating secure payments.

Tokenization, in simple terms, is a process of substituting sensitive payment information with randomly generated numbers that are referred to as tokens. These tokens hide important credentials of customers such as home and email addresses, names, debit card numbers, and bank account numbers, among other sensitive data.

To address local e-payment security needs, Interswitch, Africa’s leading integrated payments and digital commerce company, recently introduced its secure tokenization solution.

Interswitch's tokenization solution was unveiled, alongside other timely solutions like the Biometrics on PoS, Card Fusion, and the Quickteller Business and Smart PoS at its Techconnect event held recently. Now, the payments giant is set to make this solution available to a wider digital audience through its novel partnership with one of Nigeria’s foremost banks, Providus Bank.

Through this partnership, Interswitch and Providus Bank will leverage each other's payment infrastructure and customer base to boost payment collections and enhance customer experience, making digital payments personalized and more sophisticated, while also providing Providus Bank's customers with expanded online, in-app, and in-store options.

How tokenization solution works

Here is a simple process of how transactions using tokens are carried out. A cardholder kicks off a transaction process with their personal details, including payment card information. The inputted data is sent to the bank, which is then converted into a token. The bank in turn sends the token to the card network such as Verve for approval.

Once approval is received, the customer's sensitive information is stored in the bank's external data reserve, away from the prying eyes of cyber-fraudsters. This is followed by an authentication process where the bank either accepts or denies the transaction after verification. After this, a unique token is sent to the merchant for future transactions.

These layers of protection are assiduously followed to ensure that customers' sensitive data are protected. As an innovative company, Interswitch continues to rethink possibilities that exist in the payments ecosystem to improve the payment experience of Nigerians and Africans at large.

Tokenization crucial for payment regulations

This is especially useful as more Nigerians are adopting the online payment options. According to this 2021 report by Statista, the “number of visitors in online marketplaces grew constantly, exceeding 250 million in 2019”.

Due to the ability of tokens to reduce exposure of data to breaches, payment firms that adopt this technology find it easy to achieve requirements for privacy regulations such as Payment Card Industry Data Security Standard (PCI DSS) and General Data Protection Regulation (GDPR). Not only does this imbue trust in customers who are rest assured that their funds and data are secure, but it also ensures that sensitive data of customers of financial institutions such as Providus Bank are protected from cyber-harm.

As the world continues to shift toward contactless payment, more digital netizens will embrace tokenization for the convenience and safety that comes with it. At the forefront of this evolution is Interswitch which remains positioned to continue upping the ante in its payment solutions offerings, partnering with credible organizations, and creating an enabling payments ecosystem.