# What is card-on-file EMV payment tokenization?
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2018-09-19
Category: FINANCE
Category URL: https://financedigest.com/category/finance
Meta Title: The Changing Landscape of Payments: Combatting Card Not
Meta Description: Combat CNP fraud with EMV payment tokenization. Securely store payment tokens instead of card numbers to protect against fraud and enhance user experience.
URL: https://financedigest.com/what-is-card-on-file-emv-payment-tokenizationhtml

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**_Andr_** **é** **_Stoorvogel, Director, Product Marketing, Payments at Rambus_**

> The way we pay is changing. Consumers are now using their PC, smartphones, wearable devices and even cars to buy goods and services.

The size and value of the card-not-present (CNP) [market is increasing exponentially as payment](https://www.financedigest.com/contactless-payments-spirit-willing-but-is-the-market.html "Contactless Payments: Spirit Willing but is the Market?") use-cases across e-commerce, m-commerce and the Internet of Things (IoT) emerge and mature.

**What is card-on-file?**

The process of collecting and storing [payment credentials for future](https://www.financedigest.com/eliminating-payment-barriers-the-future-of-supply-chain-payments-is-digitization.html "Eliminating Payment Barriers: The Future of Supply Chain Payments is Digitization") use, known as card-on-file, is fundamental to the remote commerce ecosystem.

The use of card-on-file can be divided into various channels such as recurring payments, one-click ordering, in-app payments and IoT payments.

**The cost of convenience?**

Although [payment methods utilizing card-on-file offer](https://www.financedigest.com/fingerprints-and-tag-systems-collaborate-to-offer-contactless-biometric-payment-cards-globally.html "Fingerprints™ and Tag Systems collaborate to offer contactless biometric payment cards globally") convenience, they also create challenges. CNP fraud continues to surge worldwide, and is set to hit [$7.2 billion by 2020](https://www.emc.com/collateral/analyst-reports/aite-3d-secure-force-cnp-fraud-prevention-awakens-wp.pdf).

[Merchants must](https://www.financedigest.com/psd2-merchants-must-regain-checkout-control-through-delegated-authentication.html "PSD2: Merchants Must Regain Checkout Control Through Delegated Authentication") therefore contend with a growing threat of card-on-file databases being compromised and the credentials being used fraudulently.

**[Combatting Card Not Present fraud](https://www.financedigest.com/combating-payment-fraud-in-the-era-of-contactless-everything.html "Combating payment fraud in the era of contactless everything") – a false economy**

To combat this rise in CNP fraud, merchants can deploy various [technologies and techniques such as 3-D Secure](https://www.financedigest.com/how-open-source-technology-is-securing-the-future-of-financial-services.html "How open-source technology is securing the future of financial services"), validation services, historical data, real-time monitoring and analytics, and manual screening.

Advances are undoubtedly being made to make these [security techniques more intelligent](https://www.financedigest.com/artificial-intelligence-ai-to-catalyze-the-secure-messaging-in-healthcare-market.html "Artificial Intelligence (AI) to catalyze the Secure Messaging In Healthcare Market") and improve risk decisioning, but it is apparent that there is work still to be done. Unnecessary false transaction declines are outstripping the amount of actual fraud [13 times over](https://www.javelinstrategy.com/coverage-area/overcoming-false-positives-saving-sale-and-customer-relationship), meaning retailers are losing a total of $8.6 billion per year due to false declines compared to the $6.5 billion of fraud they are [actually preventing](http://uk.businessinsider.com/the-false-declines-report-the-86-billion-problem-undermining-e-commerce-merchants-fraud-prevention-strategies-2016-7?r=US&IR=T).

Merchants, who are in a constant battle against cart abandonment, [must also ensure that additional security](https://www.financedigest.com/the-three-must-haves-of-cyber-security-that-you-need-to-stay-cyber-safe.html "The three “must haves” of cyber security that you need to stay cyber safe") measures do not compromise the user experience.

**Introducing card-on-file EMV® payment tokenization**

Security approaches that decrease the sensitivity of the underlying payment credential can [fight fraud](https://www.financedigest.com/how-speech-recognition-and-ai-are-fighting-fraud-in-financial-services.html "How speech recognition and AI are fighting fraud in financial services "), without compromising the user journey.

[EMV payment tokenization](https://www.rambus.com/blogs/what-emv-tokenization-2-0-means-for-the-payments-industry/?utm_source=iseepr&utm_medium=Blog&utm_campaign=Card-on-fileTokenization) describes the process of replacing a primary account number (PAN) with a unique payment token that is restricted in its usage, for example, to a specific device, merchant, transaction type or channel.

Importantly, tokens can move through the transaction flow in the same way as the original PAN, meaning merchants can strike an effective balance between high security and a frictionless buying experience.

**[Enhancing security](https://www.financedigest.com/open-banking-as-a-means-to-enhance-social-commerce-security.html "Open banking as a means to enhance social commerce security") with EMV payment tokenization**

With card-on-file EMV payment tokenization, the merchant only stores payment tokens in their database rather than the actual card number. This delivers various security benefits to the digital commerce ecosystem by reducing the risk and mitigating the impact of malware, phishing attacks and [data breaches](https://www.financedigest.com/how-financial-organisations-can-stay-protected-from-financial-data-breaches.html "How Financial Organisations can Stay Protected from Financial Data Breaches "). Better [fraud prevention will have a tangible impact on both consumers and merchants](https://www.financedigest.com/three-online-fraud-trends-beauty-and-cosmetics-merchants-should-watch-out-for.html "Three Online Fraud Trends Beauty and Cosmetics Merchants Should Watch Out For").

**Benefits beyond security**

Crucially, card-on-file EMV [payment tokenization offers much more than simply enhancing security](https://www.financedigest.com/top-tips-for-securing-softpos-payments.html "Top tips for securing SoftPOS payments"). It can significantly increase [convenience for consumers](https://www.financedigest.com/as-consumer-spending-increases-convenience-and-security-have-never-been-more-important.html "As consumer spending increases, convenience and security have never been more important") and create efficiencies for merchants.

Card-on-file tokenization systems enable [consumer payment](https://www.financedigest.com/unfolding-the-great-payments-disruption-how-consumers-can-navigate-this-new-financial-world-and-how-financial-institutions-can-rise-to-the-challenge.html "Unfolding the Great Payments Disruption – how consumers can navigate this new financial world and how financial institutions can rise to the challenge") details to be instantly refreshed when a card is lost, stolen or expires. It means there is no need for a consumer to login to an [online shopping](https://www.financedigest.com/increasing-trend-of-online-shopping-to-create-new-growth-opportunities-for-stretch-sleeve-and-heat-shrink-labels-market-says-tmr.html "Increasing Trend of Online Shopping to Create New Growth Opportunities for Stretch Sleeve and Heat Shrink Labels Market, Says TMR") account to update their details, or to miss out on a subscription due to redundant card credentials.

Merchants too can benefit from increased convenience. For example, it helps to reduce the [regulatory burden and costs associated with ensuring PCI DSS compliance](https://www.financedigest.com/how-a-zero-trust-architecture-can-help-accelerate-digital-transformation-for-financial-institutions-without-sacrificing-regulatory-compliance.html "How a zero trust architecture can help accelerate digital transformation for financial institutions without sacrificing regulatory compliance") for stored card credentials.

**Value for all**

EMV payment tokenization can significantly enhance the [security](https://www.financedigest.com/contactless-payments-the-way-of-the-future-or-security-scare.html "Contactless Payments – The Way of the Future or Security Scare?") of card-on-file payment methods, while increasing convenience and simplifying the user experience. This brings huge value to the [digital payments](https://www.financedigest.com/why-anti-spoofing-fingerprint-technology-is-essential-for-the-continued-growth-of-digital-payments.html "Why anti-spoofing fingerprint technology is essential for the continued growth of digital payments") space, so we can expect to see growing momentum for the technology in the coming months and years.

_Rambus’_ [_Token Gateway for E-Commerce solution_](https://www.rambus.com/security/payments/token-gateway/?utm_source=iseepr&utm_medium=Blog&utm_campaign=Card-on-fileTokenization) _is one of the first to be qualified under the_ [_“Visa Ready” program_](https://visaready.visa.com/) _. This enables token requestors like online merchants, payment service [providers](https://www.financedigest.com/unprecedented-constructive-disruption-to-drive-the-sleep-service-providers-market.html "Unprecedented, constructive disruption to drive the Sleep Service Providers Market") and acquirers globally to quickly and securely connect to the Visa Token Service to tokenize card-on-file e-commerce transactions._

_Interested in learning more about the benefits of a Token Gateway? Download the_ _eBook now._ _\*EMV® is a registered trademark in the U.S. and other countries and an unregistered trademark elsewhere. The EMV trademark is owned by EMVCo, LLC._


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