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VISA bets on Payment Tokens as the future of cards
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Visa has unveiled new products and services that it says will ‘revolutionise’ the payment card and address the future needs of businesses, merchants and consumers and the financial institutions that serve them.

At its big launch event in San Francisco Jack Forestell, Chief Product and Strategy Officer at Visa, said: “The industry is at a pivotal point – new technologies like Gen AI are rapidly shifting how we shop and manage our finances. We’re announcing the next generation of truly digital-native payment card experiences. Today we unveiled new card features and digital innovations that will bring consumers into a more customized, convenient and secure future.”

A Visa study found that more than half of card users want the power to access multiple accounts through a single credential. The Visa Flexible Credential will allow a single card product to toggle between payment methods, putting the power of choice in the hands of the consumer. Now people can easily set parameters or choose whether they use debit, credit, “pay-in-four” with Buy Now Pay Later or even pay using rewards points. Visa Flexible Credential is live in Asia and will be launching with Affirm later this summer in the U.S.

There are six billion mobile devices in the world providing consumers with a versatile NFC enabled device primed to be “tapped.” At the end of 2023, Visa’s tap to pay penetration reached 65% globally, up two times the penetration we saw in 2019, cementing tap as one of the best commerce experiences today.

This year, new ways to “tap” on a mobile device will become an integral part of the Visa experience.

  • Tap to Pay: Any device can now be a POS device
  • Tap to Confirm: Easily authenticates identity when shopping online
  • Tap to Add Card: Enhances security when adding card into a wallet or app
  • Tap to P2P (person-to-person): Allows money to be sent between family and friends

Other key product announcements include:-

Visa Payment Passkey Service

Identifying a person in the digital world has become incredibly complex and has resulted in a significant increase in fraud. Today, online payment fraud is seven-times higher than in-person payments.

Built on the latest Fast Identity Online (FIDO) standards, the Visa Payment Passkey Service confirms a consumer’s identity and authorizes online payments with a quick scan of their biometrics like a face or fingerprint. When shopping online, Visa passkeys replace the need for passwords or one-time codes, enabling more streamlined, secure transactions.

“There is a global desire to find commonality, interoperability and simplicity for online payments. Our passkeys, designed specifically for payments, represent a massive paradigm shift in our industry because it confirms identity without interrupting the checkout experience,” said Forestell. “Visa Payment Passkey Service increases security while reducing friction when you pay online, across any device or website, globally.”

Click to Pay + Visa Payment Passkey Service

As its first deployment of passkeys, Visa is integrating Visa Payment Passkey Service into Click to Pay, powering a more seamless and secure checkout experience at scale. Additionally, in many markets around the world, Visa will partner with issuers to enable Click to Pay and Visa Payment Passkey Service on new Visa cards, reducing manual entry of card details and passwords from the moment the card arrives.

Pay by Bank

Non-card payments don’t deliver the same experience, security and protections as card-based payments. Electronic payments, like ACH transfers, have been left out of the digital revolution. With pay by bank, Visa is digitizing and streamlining the account-to-account (A2A) payments experience, giving people more choice over how they want to pay, whether that’s an A2A transfer, applying for a loan or paying with another funding source, like a credit card. Since its acquisition of Tink, Visa has expanded across Europe, giving millions of bank customers innovative financial management tools and removing friction from their payment experiences. Visa is bringing this new technology to the U.S. to help its clients deliver additional seamless, protected banking experiences.

Visa Protect for A2A Payments

Visa sees over 200 billion transactions every year and analyzes 500 data elements in every transaction to identify and stop fraud5 in real time. Working with Real-Time Payments (RTP) networks around the world, we are overlaying decades of Visa expertise in applying AI to help mitigate fraud for account-to-account payments on RTP networks. Live in Latin America and piloting in the UK, Visa Protect for A2A Payments is already identifying 60% of RTP fraud and scams previously undetected by financial institutions.

Data Tokens

For the last 10 years, Visa has added security to the payments ecosystem by tokenizing payments, removing sensitive cardholder account information from the payment flow. Today, 29% of all transactions processed by Visa are tokenized, with widescale adoption by merchants and issuers in nearly every market globally. As new data regulations create a guide for better consumer data privacy practices, and Gen AI transforms how we discover things online, Visa believes that payment data has a role to play in delivering these new and improved experiences – and that consumers should be empowered to have more control too. Using its tokenization infrastructure, Visa will offer a new way for people to control their data and receive better shopping experiences, powered by AI.

Visa data tokens let consumers, whose financial institution participates in the program, consent to sharing their data as they shop online, then see where it’s been shared and revoke access right from their banking app. With data tokens, Visa and participating banks can enable an experience where a merchant can request consent from the consumer to get more personalized offers as they shop. If the consumer agrees, behind-the-scenes, Visa issues a private data token to the merchant complete with AI-generated insights based on the consumer’s transaction data.

The data token can be used with the merchant’s AI models to deliver real-time recommendations for the shopper. Visa will also pass the data token to the consumer’s bank to capture where the data has been shared, so the consumer can easily review where it has been shared in their mobile banking app and revoke access if they choose.

Visa delivers new Click-and-Mortar’ solutions
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Visa has unveiled new solutions for merchants who serve the new fast-growing segment of ‘Click-and-Mortar’ shoppers, who rely on digital features to shop both online and in-store.

“The payments sector has made significant strides in simplifying the consumer shopping experience. In doing so, the payments ecosystem has become more complex and fragmented for sellers — but it doesn’t have to be this way,” said Rob Cameron, Global Head of Acceptance Solutions, Visa. “Visa Acceptance Solutions allows businesses worldwide to offer their customers best-in-class payment options without over-indexing on complexity for themselves.”

Visa’s latest enhancements support merchants of all sizes with new and improved commerce experiences including:

  • Improved access to and ease of integration with partners: Visa Acceptance Platform is debuting Developer Assist, an AI-powered tool to help partners develop sophisticated payment flows, answer questions on testing and certification and even suggest sample code. The platform, which is used by more than 450 payment service providers (PSPs), connects to over 100 independent software vendors (ISVs), bringing ease of use to over 450,000 active merchants each month across 160 countries using 50 different currencies.
  • A reimagined small and medium-sized (SMB) business platform: Authorize.net has reimagined its user interface (UI), bringing data and streamlined day-to-day business operations to the forefront. The new UI has benefits for both partners and merchants across new dashboards, workspaces and smart search functionalities.
  • Growing mobile acceptance, without additional hardware: Tap to Phone, which allows sellers to accept contactless payments using a certified smartphone, is now live in 121 countries with more than 6.7 million active terminals and more than $8.5 billion in payment volume on a 12-month basis3. Visa is also deploying contactless technology from Tap to Phone in new innovative ways, including the recent pilot in Latin America and the Caribbean that allows consumers to tap their cards to their own device in order to pay for online purchases.

“The past few years have had a profound and lasting impact on the commerce strategies for merchants of every shape and size. Consumers desire immediacy and increasingly expect digitally evolved experiences. To keep pace with this trend, merchants are now looking for partners to help them simplify their ability to maintain connectivity to the ecosystem,” said Jordan McKee, Research Director at S&P Global Market Intelligence 451 Research.

Visa highlights AI threat in latest data
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Visa’s latest Biannual Threats Report highlights a ‘significant’ rise of phishing schemes proliferated through generative AI tools, and a marked increase in enumeration and ransomware. While the global fraud rate trended lower than normal expected fraud levels during the report’s time period (January – June 2023), Visa shared that it helped to proactively block $30 billion in those time periods.

However, threat actors were successful in conducting targeted and sophisticated fraud schemes impacting specific institutions, technology, and processes.

Highlights of the report’s findings include:

  • Ransomware attacks continue to evolve and grow in prevalence. March 2023 surpassed prior ransomware attack records for the most attacks in one month with nearly 460 attacks; a 91% increase over February 2023 numbers and 62% higher compared to the same period in 2022. A 2023 ransomware report identified that exploited vulnerabilities were the most common (36%) root cause of ransomware attacks, followed by compromised credentials (29%). Interestingly, ransomware attacks and related threat actors do not always target payment data specifically but will compromise any data accessible during their attacks including payment data or personal identifiable information.
  • Enumeration attacks continue to impact merchants and consumers alike. The period covered in this study saw a 40% increase in enumeration attacks over the previous six months. Visa used its Visa Account Attack Intelligence to identify these attacks in real time to alert merchants and stop fraud in its tracks.
  • Card-Not-Present merchants emerge as bigger target. Online merchants were responsible for 58% of total fraud and breach investigations, while brick and mortar merchants made up 20%, and ransomware/fraud scheme made up 7%.

Retail-specific schemes saw a measurable uptick during the past six months, including:

  • False, spoofed, or counterfeit merchants: Consumers are being targeted through websites that seem like their favorite merchants. These sites are established to take customers’ orders but do not fulfill the goods or services ordered and instead steal customers’ payment account information.
  • The rise of malvertising: Some scammers are developing fake ads to try to garner personal information. Victims of these schemes are targeted with search engine-optimized scams that prey on what they might be interested in legitimately purchasing.
  • Flash-fraud scams: Flash fraud merchants, also known as bust-out schemes, which is when threat actors establish a legitimate merchant and process a small number of legitimate payments to establish credibility, are also on the rise. Once a satisfactory payment processing history is established, the seller suddenly submits a large number of fraudulent transactions—often using stolen payment account data – and quickly disappears after they obtain the funds from the stolen accounts.
  • Free gift scams: An emerging crypto scam in the retail space is the “free gift” scam, where bad actors offer a “free gift” through a pop-up window asking the victim to confirm the transaction. When clicked, the malicious payload is executed, which includes a file with malicious NFT, allowing fraudsters to communicate with the victim’s wallet and authorize cryptocurrency transfers from the victim’s wallet to the fraudster’s.

“While we are pleased by the lower-than-expected fraud rate over the last few months, this edition of the Biannual Threats Report continues to underscore just how savvy fraudsters continue to be,” said Paul Fabara, Chief Risk Officer at Visa. “The same way criminals take advantage of technology advances, so does Visa, and the $30 billion of fraud prevented in the last six months alone is a great testament to that.”

While the threat landscape is more complicated than ever, consumers can take solace in the ways Visa is working to protect them. Visa Payment Fraud Disruption’s efforts over the past six months have resulted in significant crackdowns on cybercrime activities with help from global law enforcement and government agencies.

Visa says it also helped bring fraudsters to justice around the world. In May 2023, the US Secret Service took down a major cybercrime platform called Try2Check. Its administrator, Denis Gennadievich Kulkov, faces 20 years in prison. A local enforcement action called Operation Urban Justice was launched in California targeting Electronic Benefit Transfer (EBT) fraud, which led to the arrest of 20 suspects believed to be part of an Eastern European crime syndicate. In April 2023, an international law enforcement coalition led the Genesis Market Takedown, arresting 119 people involved with the cybercrime platform.

Image by hartono subagio from Pixabay