This week, the world’s largest digital payment platform, Visa Inc. (NYSE: V) announced that its blockchain-based Visa Token Service would be instituted across the US. The Visa Token System tokenizes card payments to streamline the entire payment process. The integration is meant to simplify and further secure the online shopping experience for millions of users. Importantly, the decision to utilize blockchain technology signals a shift by one of the largest payment processors in the game.
According to company documents, on January 21 the new system will replace Visa Checkout across the US. Basically, all active US Visa Checkout merchants will get the upgrade without the need to make any changes on their part. In essence, it will be seamless.
Discussing the goals of the transition, Jack Forestell, the Chief Product Officer of Visa, explained that his firm wanted to create the “best customer experience possible.” As such, the firm recognized an urgency to build a more seamless and secure platform specifically designed to meet the needs of online shoppers. He also took a moment to tout the added level of security achieved through the integration of blockchain tech.
The new system integrates a host of advanced technology and authentication methods to keep users safe in 2020. Some of these new technologies include the integrations of device binding and biometrics systems.
The new systems will allow all participating retailers to shorten the number of steps required to make an online purchase. For example, consumers will no longer need to enter a 16-digit primary account number when making their purchases. Additionally, the upgrade does away with old school passwords.
A New Strategy for Visa
Part of the motivation behind the upgrade came from the release of The Visa Global Merchant eCommerce Study (GME Study). This yearly study looks into the most important factors in successful online sales. Importantly, this year’s results showed that quick delivery (44 percent) was at the top of shoppers’ demands. Also, it listed an easy checkout process and convenient payment methods as the following most important attributes.
Visa Token Service
The Visa Token Service has been in development since the middle of 2019. Early reports of the plan surfaced after news broke of Visa’s intention to purchase the blockchain tokenization firm Bell ID from Rambus in June. In the end, the payments giant decided it was best to purchase two subsidiaries from Rambus. These subsidiaries were Bell ID and Ecebs Ltd.
The new system allows Visa to securely tokenize assets with bank-grade encryption in minutes. Executives stated that the first steps are to tokenize transactions from its Visa cards and other payment systems. This concept is the next step in Visa’s blockchain strategy which began with the tokenization of sensitive information. This maneuver was an attempt to remove the need to share private information with third-parties directly.
Speaking on the new strategy, TS Anil, Global Head and Senior Vice President at Visa, explained the decision to focus on tokenizing card transactions first. He described the importance of securing digital payments in today’s online economy across multiple form factors.
Visa Token Service
The Visa Token Service is a prime example of how blockchain technology simplifies the current business systems. With most reports predicting a combined eCommerce volume of $1 trillion this year, its no surprise that Visa continues to explore its options. You can expect to see this firm continue along its tokenization path as the cost and security benefits are too large to ignore.