Adyen and JCB Roll Out Card-on-File Tokenization Service

FinTech platform Adyen has launched a collaboration with Japanese payment brand/credit card issuer JCB.

With this partnership, Adyen becomes the first company to offer and implement JCB’s card-on-file (COF) tokenization service domestically and globally, the companies said in a Tuesday (May 13) news release.

This service, the companies said, is designed to bolster the security of credit card transactions for eCommerce merchants.

“eCommerce transactions are growing rapidly, and alongside this growth, fraudulent transactions due to card information breaches are also increasing,” said Tac Watanabe, executive officer and head of brand infrastructure headquarters at JCB. “In response to this trend, it is important to reduce the risk associated with data breaches through COF tokenization and improve our customers’ payment experience by keeping card information up to date.”

Watanabe added that JBC plans to implement COF tokens on a global scale. The term COF refers to payment details like card numbers and expiration dates, which are stored by merchants with cardholders’ permission.

The JCB COF tokenization service replaces the JCB-branded COF data with an anonymized secure number or network token. Thus, sensitive card information is tokenized and not stored in the merchant’s database, reducing the risk of data breaches.

“In addition to reducing the risk of data breaches, tokenization offers increased convenience to customers,” the release added. “The COF token mechanism ensures that the token is always associated with the latest card information. This eliminates the need for the customer to update their card information, facilitating a smooth payment process and improving the transaction authorization rates.”

Research by PYMNTS Intelligence and Visa Acceptance Solutions has shown that 69% of acquirers believe that stronger encryption and tokenization can help bolster security.

In separate data detailed by Visa, the company said that token-based transactions fueled a 30% reduction in fraud online versus PAN (16-digit card number) and a 4% uplift in authorization, against a backdrop where as much as 44% of digital transaction abandonment can be connected to friction in the payments process.

For online, card-not-present transactions, Visa has said that there is a more than 3% boost in authorization rates when tokens are used in card-not-present settings.

“In the event of face-to-face commerce, tap-to-pay transactions are tokenized payments,” PYMNTS added. “The rise of mobile wallets also offers a growth engine for tokenized payments, as the tokens can be stored in those wallets.”