What is Token Connect?
Let’s start with the tech. Token Connect is Mastercard’s new tokenization flow, which enables banks to push payment card credentials to eligible Mobile Wallets and Merchants to create new tokens. The user’s card data remains secure in the bank app eliminating the risk of leakage. As a result, you don’t need to enter card details into any other wallets or wearable apps. The push provisioning connects to proprietary wallet APIs, which most payment issuers in Europe already provide support for, such as ApplePay and GooglePay.
One of the main drivers behind Token Connect is minimizing fraud. By creating an ecosystem that most European banks are connected to, based on tokens rather than card numbers, fraud can essentially be eradicated within the ecosystem. The cards themselves still have numbers and names on them. Still, if you’re tap and paying, rather than inserting a card in a terminals at payment – or even better, using a contactless wearable to pay – your cards never need to be removed from wallets and exposed to fraudsters. Less fraud means greater trust in contactless payments, which should increase the uptake rate even faster.
For banks, it becomes easier to onboard multiple contactless payment platforms and offer their services to customers. Contactless platforms such as Fidesmo Pay, Samsung Pay, Garmin Pay, etc., all become more accessible to European banks through Mastercard’s Token Connect, which acts as a secure gateway to the platforms. Of course, the reverse is equally true, meaning Fidesmo Pay is now open to European issuers on the Mastercard payment rail. Increased access to users and a broad reach should see the uptake of wearables for contactless payments increase across Europe.
Improved user experience
Token Connect also offers an improved experience for users connecting wearables to cards. Currently, new users often have to open multiple apps to connect their cards, i.e., banks, payment platforms, and, in some cases, wearable providers. For Mastercard users, much of this process can now be moved to the backend, at least it can for Fidesmo Pay. This enables users to simply click-to-connect their cards in their bank app. With an improved user experience, reviews will improve, which should positively impact wearable sales.
New sales opportunities
Even though the above benefits may positively impact revenues for the contactless payment ecosystem, there is one clear sales channel that can now be fully explored, thanks to Token Connect. And that is in-app sales of wearables. Banks can now offer contactless wearables as an in-app purchase or an account upgrade without involving third-party software. One of our issuer partners in Germany is currently trialing a light version of this service to offer users in-app ordering of wearables connected to their accounts. We know contactless increases spending, so providing this option for your customers can increase spending with your bank.