Mastercard's Push to Eliminate Card Numbers and Passwords for Online Shopping

 

Mastercard is stepping up efforts to combat the rising threat of online payment fraud by replacing traditional card numbers and passwords with advanced technologies like biometrics. The payments giant, which processes over 1 billion tokenized transactions per week, is aiming to make online shopping safer and more secure by eliminating the vulnerabilities associated with card numbers and passwords.

A Decade of Progress in Tokenization

Mastercard introduced tokenization—a technology that replaces sensitive card numbers with encrypted tokens—over a decade ago. Initially, this innovation was a response to high-profile breaches, including those at Target and Best Buy, where millions of customers’ credit card data was compromised. The tokenization process ensures that even if a hacker gains access to payment details, the token is worthless unless it is decoded by the payment network.

Since its introduction, tokenization has played a key role in reducing fraud, especially for in-store payments through services like Apple Pay. But as online shopping grows, cybercriminals have increasingly shifted their focus to e-commerce platforms, where consumers manually input their card details. Now, Mastercard is expanding its tokenization technology to protect these vulnerable online transactions.

Moving Beyond Passwords to Biometrics

To further reduce fraud, Mastercard is looking to replace outdated security measures like passwords and  one-time passcodes with biometric date, such as fingerprints or facial recognition. Chief Executive Officer Michael Miebach highlighted this strategy during an interview at Mastercard’s London offices, noting that passwords, once considered essential for online security, have become a vulnerability themselves.

"At first, passwords were a solid way to protect data and transactions," Miebach said. "But over time, they became more of a liability than a safeguard." With the rise of sophisticated fraud schemes, hackers have found new ways to bypass one-time passwords and authentication measures, particularly in regions like India where these methods are widely used.

Mastercard has now launched biometric-based token services in India, partnering with companies such as PayU  and  Axis Bank Ltd. to replace these one-time passwords with more secure, tokenized solutions.

Fighting the Surge in Online Payment Fraud

The shift to tokenization and biometrics comes as online payment fraud is projected to reach over $91 billion by 2028. The growing threat to consumers and businesses alike has forced the financial industry to rethink traditional security protocols.

For Mastercard, the digital economy’s growth is increasingly being hampered by the risk of data breaches and Fraud. Miebach emphasized that tokenization is key to addressing this problem. "The digital economy is held back by the fear of data breaches. Tokenization is one of the most effective tools we have to curb these risks."

Future Plans: A Fully Tokenized E-Commerce World

Mastercard’s vision for the future involves the widespread adoption of tokenization across all online transactions. The company has set an ambitious goal to fully tokenize all e-commerce transactions in Europe by the end of the decade. This would create a more secure online shopping experience, reducing the chances of fraud while ensuring a seamless process for consumers.

By partnering with banks and payment providers globally, Mastercard aims to make tokenization and biometrics the new standard for online payments, replacing outdated security measures that have become easy targets for cybercriminals. As these technologies continue to evolve, the company hopes to play a pivotal role in securing the digital economy for years to come

In conclusion, Mastercard's strategy to phase out card numbers and passwords, replacing them with tokens and biometrics, marks a significant step forward in the fight against online fraud. As the digital landscape continues to grow, these advancements will likely become a cornerstone of secure online transactions, creating a safer and more efficient ecosystem for consumers and businesses alike.