Mastercard Inc. is advancing its mission to eliminate the use of traditional credit card numbers in online shopping, aiming to bolster security and reduce fraud. The payments giant is expanding its tokenization technology, which replaces consumers’ card numbers with unique digital tokens, to enhance the safety of e-commerce transactions.
Chief Executive Officer Michael Miebach highlighted Mastercard’s progress, revealing that the company now processes 1 billion tokenized transactions every week. This milestone comes after the firm took three years to reach its first billion transactions with the technology. Miebach shared the company’s plans during an interview at Mastercard’s London offices.
Mastercard introduced tokenization technology a decade ago, following high-profile data breaches at major retailers like Target Corp. and Best Buy Co., which exposed millions of consumers’ credit card information. The technology was initially focused on in-store purchases, replacing card numbers with tokens that only the payment networks can unlock, rendering them useless to hackers.
However, as e-commerce has grown, so too have the security challenges. Cybercriminals are increasingly targeting online retailers that require customers to manually enter their card details, as well as websites in regions like India, where one-time passwords are commonly used for authentication. These one-time passwords, which banks and retailers send to consumers to verify their identity, have become a new vulnerability in the fight against fraud.
To address these risks, Mastercard is partnering with banks and payment providers globally to replace one-time passwords with tokens based on consumers’ biometric data, such as fingerprints or facial recognition. The company introduced this service in India this week, partnering with PayU and major banks like Axis Bank Ltd.
Miebach emphasized the importance of this shift, noting that the traditional approach of securing transactions with passwords has become more of a liability than a safeguard. “The source of the problem was that if the data was exposed and somebody penetrated and got into that data, they could use it,” he explained. “The digital economy — what is the one thing that’s holding it back? It’s the risk of data breaches, fraud, and so forth. And tokenization is a big lever to curb those.”
Looking ahead, Mastercard has set an ambitious goal: to have all e-commerce transactions in Europe fully tokenized by the end of the decade. As the digital landscape evolves, the company’s push towards biometrics and tokenization represents a significant step in the ongoing battle against online fraud, which is projected to surpass $91 billion by 2028.
