Mastercard is making a huge change to payments for millions and it will change shopping online forever
MASTERCARD is planning a huge change to payments for millions – and it could change online shopping forever.
The card network has said it wants 100% of all e-commerce transactions to be “tokenized” by 2030.
This means Mastercard customers would be issued a randomly generated number when they input their card details before buying a product.
This code can then be used to make future payments instead of having to input the long 16-digit number on the front of their debit or credit cards each time.
The method is designed to make online payments quicker, with customers able to purchase items with one click.
Mastercard also says the method is safer for customers, with your bank card details not shared with merchants, making it harder for hackers to steal money from you.
Mastercard first started rolling out the payment method in 2014, with around 25% off all online payments currently made this way globally.
But it has now said it want to roll out tokenization across all its merchants by the end of the decade.
Valerie Nowak, executive vice president of product and innovation at Mastercard Europe, said: “In Europe we have seen tokenization gaining momentum across the ecosystem, the convenience and reduced rates of fraud sell themselves.
“We are confident that reaching this vision by 2030 is a win-win-win for shoppers, retailers and the card issuers alike.”
Mastercard said the roll out of the payment method will be done in a phased approach.
It is understood customers struggling to transition to the payment method will have to contact their banks or building societies for help.
But experts have raised fears the roll out of the payment system could lead to an increase in impulse purchases and some customers being left behind.
Sarah Coles, from Hargreaves Lansdown, said: “The potential fly in the ointment is that it makes shopping too easy.
“If you’ve ever stopped short of an impulse purchase because of the hassle of going to get your card, removing this friction means you could end up spending money you can’t afford on things you don’t need.”
Meanwhile, Chris Lilly, personal finance expert at the comparison site Finder, said: “The click to pay feature may almost make it too easy to pay for certain things for those who aren’t used to this feature.
What is Mastercard?
HERE'S everything you need to know...
Mastercard is a company that handles transactions when you spend on your credit, debit or prepaid card.
In essence, they act as a go between between you, your bank and a retailer.
When you go to buy something, Mastercard checks with your card provider if a transaction should be accepted or declined, then confirms to the retailer that the payment can be made.
It then processes the payment between your card provider and the retailer.
Mastercard doesn’t issue credit cards, unlike American Express and Discover.
“We hope that Mastercard and other networks will ensure consumers fully understand the changes and that businesses are not given room to abuse the new ease of payment.”
Consumer expert Martyn James added: “With fraud remaining at record levels, anything that helps protect our cash is a good thing.
“But the more our security details get digitized, the more trust we have to put in the business to get things right.
“And people who don’t use smart phones or find the internet hard to deal with are going to be left behind significantly – just as the use of cash increases in the UK for the first time in years.”
It is not just Mastercard which operates a tokenized payment system in the UK.
Visa Inc first launched the payment method in the USA 10 years ago, with customers in the UK now able to pay online via “Click to Pay”.
Customers just have to create an account once and can then purchase items online without having to re-enter their bank card or delivery details.
American Express also operates a tokenization payment system in the UK which it says helps protect customers from online fraud.
A Mastercard spokesperson said: “Just like the introduction of Chip and Pin over two decades ago, the evolution of how we pay is founded in the principle of enhancing security.
“Today just one in four people type their card details in when checking out online, and as we work with our industry partners to embed more secure ways to pay, we will ensure we bring all our cardholders with us.”
Do you have a money problem that needs sorting? Get in touch by emailing money-sm@news.co.uk.
Plus, you can join our Sun Money Chats and Tips Facebook group to share your tips and stories