This document discusses trends, challenges, and technologies related to e-commerce checkouts. It notes that 61% of checkouts are card-based, which face issues like abandonment, declines, and fraud. Tokenization and Secure Remote Commerce (SRC) are presented as key technologies to address these problems by digitizing cards, improving security with cryptograms, and providing a more seamless user experience through features like automatic user and device recognition. SRC in particular is described as a future standard that could create a consistent checkout experience across payment schemes. Examples are given of how tokenization and SRC could increase approval rates by 6%, conversion rates, and overall convenience and security for online transactions.

1. Silke Hubert
Pre-Sales Consultant Digital Payments
Increase conversion, convenience and security
in e-commerce checkouts
Tokenization and Secure Remote Commerce as key technologies

2. Trends and challenges in e-commerce
Structural shift
in-store to e-commerce
Increasing level of concentration
at large merchants & platforms
Regulatory requirements
such as PSD2 have strong impact
Mobile growth
m-commerce & in-app payments
Instant and effortless
user experience
Higher risk/fraud
CNP compared to CP
Lost transactional revenues
abandonments & declines
Higher costs
for CNP versus CP
Low conversion rates
especially on mobile channels
Inconsistent & inconvenient
user experience
TRENDS CHALLENGES

3. 61% of checkouts are card based and therefore face abandonments, declines and fraud
Cards
61%
Direct transfer
28%
Other
11%
29%Cards-on-File
19%Guest Checkout
13% Digital Wallets
eCommerce
Checkout Types
(Europe)
Source: Mastercard, Worldpay,BCG
Abandonment & decline rate when
3DS (1.0) is used24%
Decline rate
when 3DS is not used17%
Times higher fraud rate of CNP
compared to CP4-10
Customers abandon cart
due to long /complicated checkout1in4
E-commerce checkouts

4. Central use case of tokenization: digitize a card
Card Issuer
Substituting a sensitive data element (PAN) with a non-sensitive equivalent
Step-up authentication*
T
Token
Requestor
Token Service
Provider
(Scheme)
*e.g. 3DS NPA (Non Payment Authentication) can be used as step up for card digitization

5. … already demonstrated by many token
requestors
Token
Requestor
Token
Service
Provider
(Scheme)
Card
Issuer
OEM Pays/ Wallets
Merchants& PSP
IoT
IssuerPays/ Wallets
NEW

6. Tokenization in e-commerce
is using the same principles as for mobile contactless payment
PSP
Acquirer network
T
AuthenticationDetokenization
PAN Entry
CoF
Card IssuerToken
Requestor
Token Service
Provider
(Scheme)

7. main use cases
of e-com tokenization4
ENROLL
Add card manually or tokenize from Card-on-File
DISPLAY CARDS
Card metadata (e.g. card art) coming from token service
TRANSACT
Generate EMV cryptogram for transactions
LIFECYCLE
Issuer account update, update of PAN / token status

8. Benefits of scheme tokenization
Helps to increase security, approval rates and conversion
PAN replacement
Reduces risk & PCI scope
of Token versus PAN
Token/cryptogramassigned to merchant
Results in better risk scores at issuers
and drives increased approval rates
On-top «features»
PSD2 SCA compliant: basis for
Delegated Authentication &
Push Provisioning
EMV cryptogram
Protects against fraud
from relay and replay
Lifecycle management
Keeps credentials up to date,
avoids abandonments &
provides a more seamless user experience
Card art
Builds familiarity
& can drive conversion +

9. First results
~ 6% increase in approval rates
communicated by two schemes
Approval rate tokens vs. PAN at benchmarked samples
Approval rates vary by country, merchant and issuer
*Scheme 1: sample of over 50,000 transactions across participating online merchants during
2019, compared to overall ecommerce transactions during the same period 2018.
*Scheme 2: Authorization rate lift from decline codes within a sample of 17 merchants.
4 - 9% increased approval rate in randomized
comparison between token to PAN-based
authorizations at a global PSP (Sept. 2019)
PAN TOKEN
~ 6%
Increase
T

10. Netcetera‘s ToPay eCom Token Connector
One interface to connect to multiple schemes with unified flows

11. EMV® Secure Remote Commerce:
Key points of EMV SRC framework
Future standard to make card based e-commerce
checkouts more seamless and secure
Pay securely via single, consistent SRC checkout
button
Scheme neutral (EMVCo) successor of Masterpass
& Visa Checkout to help interoperability

12. What it looks like: See it live in the US
SRC button

13. What it looks like: See it live in the US
First time enrollment Identified user

14. What it looks like: See it live in the US
Automatic device &
user recognition

15. Benefits of SRC
Consistent and seamless checkout experience
SRC works the same for all schemes
No tedious card data entry: enrolled and returning
consumer and device are recognized
Enhanced security and reduced complexity
Every card is digitized: dynamic data improve security
Consistent, simplified integration
Integration options for EMV 3DS & scheme tokenization

16. Cards-on-File 29%
Replace PAN by token to reduce risk
Use EMV cryptogram to improve security
Use lifecycle information
• to keep credentials up to date
• to avoid abandonments
• to provide a more seamless UX
Cards in guest checkout 19%
Same as above plus
Improve usability for customer
Cards
61%
Direct transfer
28%
Other
11%
e-commerce
checkout types
(Europe)
How scheme tokenization & SRC help increase
conversion, convenience and security
T

17. Silke Hubert
Pre-Sales Consultant Digital Payments
silke.hubert@netcetera.com
Visit us at booth P12
Thank you
www.netcetera.com