Latest / Leaders In Payments / THE SIGNAL: Token Takeover, The Rise of Network Tokens with G+D, NMI and Mastercard | Episode 447

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THE SIGNAL: Token Takeover, The Rise of Network Tokens with G+D, NMI and Mastercard | Episode 447 · Leaders In Payments

• 0:01
  SPEAKER_01: Welcome to the Signal, powered by the Leaders in Payments Podcast, where we are cutting through the noise to reveal what truly matters in payments and fintech.
• 0:13
  SPEAKER_02: Hello, everyone, and welcome to the Leaders in Payments Podcast.
• 0:16
  SPEAKER_02: I'm your host, Greg Myers, and today's special guests are Mark Van Horn, the Digital Solution Lead North America at GND, Tiffany Johnson, the Chief Product Officer at NMI, and Ryan Francis, Vice President Digital Product at MasterCard.
• 0:30
  SPEAKER_02: So, Mark, Tiffany, Ryan, thank you all for being here and welcome to the show.
• 0:34
  SPEAKER_02: Thanks for having us.
• 0:34
  SPEAKER_02: Happy to be here.
• 0:36
  SPEAKER_02: So this episode is part of our signal series where we're cutting through the noise to reveal what truly matters in payments and fintech.
• 0:43
  SPEAKER_02: Network tokens aren't just about replacing pans, they're about unlocking value across the payments ecosystem.
• 0:50
  SPEAKER_02: So for software companies and ISVs, they can provide tremendous value.
• 0:54
  SPEAKER_02: And we're going to unpack just that in this episode.
• 0:57
  SPEAKER_02: So, Mark, before we dive into the meat of the conversation, can you walk us through your professional journey?
• 1:02
  SPEAKER_02: Tell us a little bit about what GD does, especially as it relates to network tokenization.
• 1:07
  SPEAKER_03: Sure.
• 1:08
  SPEAKER_03: Yeah.
• 1:09
  SPEAKER_03: My payment journey started probably in the late 90s.
• 1:12
  SPEAKER_03: Worked for a company that had a transaction tracking program for not-for-profit organizations.
• 1:17
  SPEAKER_03: That has eventually led me to where I am today.
• 1:19
  SPEAKER_03: For the past four years, I've been leading the uh digital growth and enablement for GD here in North America.
• 1:25
  SPEAKER_03: GD has done a great job over the 170 years of its existence, being a quiet player in the background.
• 1:32
  SPEAKER_03: But we do everything from uh sim chips to uh creating currency to uh being the third largest producer of debit and credit cards in the world.
• 1:39
  SPEAKER_03: So my team sits on the digital software that surrounds the use of those cards, and that includes network tokenization.
• 1:44
  SPEAKER_03: So if a card on file, we help aggregate the services from MasterCard and the other networks to provide a single uh implementation for our customers to utilize network tokens.
• 1:55
  SPEAKER_02: Okay.
• 1:55
  SPEAKER_02: Tiffany, same question for you.
• 1:57
  SPEAKER_02: Can you walk us through your professional journey and tell us a little about NMI and especially as it relates to network tokenization?
• 2:03
  SPEAKER_01: Of course.
• 2:04
  SPEAKER_01: So as you said, I am the chief product officer for NMI.
• 2:06
  SPEAKER_01: I've been here about two and a half years.
• 2:08
  SPEAKER_01: I've been in payments for going on 20 years.
• 2:11
  SPEAKER_01: And the whole journey, my primary focus has been around embedded platform payments.
• 2:16
  SPEAKER_01: And I'd say throughout my career, I've had the privilege of working with incredible customers and companies, everyone from Apple and Uber to into Amazon.
• 2:24
  SPEAKER_01: Even at one point, I helped embed payments into Formula One.
• 2:28
  SPEAKER_01: So have a lot of experience in embedded payment strategies and payments platforms.
• 2:33
  SPEAKER_01: And then a bit about NMI.
• 2:35
  SPEAKER_01: NMI is a global payments platform.
• 2:37
  SPEAKER_01: We serve about 4,000 channel partners.
• 2:39
  SPEAKER_01: So PayPax, ISOs, banks, ISVs, Sense platforms.
• 2:43
  SPEAKER_01: And through those channel partners, they provide payment services to over a million small and medium-sized and in some cases enterprise businesses as well that are using our platform to process payments as they sell their goods and services.
• 2:57
  SPEAKER_01: So our mission at NMI is to deliver that full service payments acceptance platform for our partners.
• 3:03
  SPEAKER_01: And it's fully white labeled.
• 3:04
  SPEAKER_01: So you may not have heard of us, but you've probably processed transactions through us.
• 3:08
  SPEAKER_01: And as part of that vision, we think network tokens are critical to the acceptance journey because of the lift it creates and approvals, friction, everything that's important to that payments journey.
• 3:18
  SPEAKER_01: And obviously, we'll be diving in today.
• 3:21
  SPEAKER_01: So thanks for having me.
• 3:22
  SPEAKER_02: Absolutely.
• 3:23
  SPEAKER_02: So, Ryan, your turn, same question for you.
• 3:25
  SPEAKER_02: Can you walk us through your professional journey?
• 3:27
  SPEAKER_02: Tell us a little bit about what MasterCard does, especially as it relates to network tokenization.
• 3:32
  SPEAKER_00: Thanks, Greg.
• 3:33
  SPEAKER_00: Um, it's great, great to be here.
• 3:34
  SPEAKER_00: So, yeah, I basically the vice president of Digital Product for North America at MasterCard.
• 3:40
  SPEAKER_00: I have over uh 22 years of of payments experience predominantly on acceptance and supporting acquirers and payment service providers.
• 3:50
  SPEAKER_00: But uh my focus right now is is really on building the next generation of digital commerce experiences.
• 3:57
  SPEAKER_00: So my team is really focused on making sure that payments remain seamless, secure, and intelligent.
• 4:03
  SPEAKER_00: You know, from a MasterCard point of view, I mean, we've obviously very much led the way in terms of network tokenization.
• 4:10
  SPEAKER_00: And really since their inception over you know 10 years ago now, you know, we've continued to evolve the capabilities of digital tokens.
• 4:19
  SPEAKER_00: And so continuing the work that I've done over those years, really, in terms of you know working with our acceptance partners and issuing partners to scale our tokenization footprint.
• 4:29
  SPEAKER_00: You know, we've got to a point really where more than 30% now of MasterCard transactions globally are using um NDES and tokenized Rails.
• 4:39
  SPEAKER_00: And that's even greater.
• 4:40
  SPEAKER_00: I mean, in in North America, it's around 50% now.
• 4:44
  SPEAKER_00: So, you know, tokenization has really been the foundation of uh a lot of the uh the innovation and digital use cases that we've come to see in uh come to fruition in recent years.
• 4:54
  SPEAKER_02: Okay, great.
• 4:55
  SPEAKER_02: So let's dive into the topic for today's conversation, obviously, network tokenization.
• 5:01
  SPEAKER_02: So, Mark, let's start with you.
• 5:03
  SPEAKER_02: Can you define general tokenization and then tell us maybe what the difference is between general tokenization and network tokenization?
• 5:10
  SPEAKER_03: Yeah, very simply put, uh, turning back the clock to the early days of online transactions and the internet and e-commerce, and merchants started storing PANS and payment credentials for their customers, for repeat customers.
• 5:23
  SPEAKER_03: This was obviously highly susceptible to fraud and and breaches and things of that nature.
• 5:28
  SPEAKER_03: So some smart people came up with tokenization.
• 5:31
  SPEAKER_03: And this is basically the idea of taking sensitive information and turning it into a non-sensitive equivalent, right?
• 5:37
  SPEAKER_03: So this token is useless outside the realm of working with that merchant.
• 5:42
  SPEAKER_03: Uh so if you steal a token, it to you can't really use it anywhere.
• 5:45
  SPEAKER_03: This has really helped protect merchants to have a lower susceptibility to fraud.
• 5:51
  SPEAKER_03: But as it has evolved, it's become necessary.
• 5:53
  SPEAKER_03: And Ryan and his team and his equivalents have realized that there's a real role there for networks to participate in this.
• 6:00
  SPEAKER_03: So the first iteration did a great job of getting the responsibility out of the merchants' hands, but that responsibility then fell on companies like NMI to protect that data.
• 6:09
  SPEAKER_03: In the newest version, we have the actual tokens being generated by the networks.
• 6:14
  SPEAKER_03: So Visa, MasterCard, Amex Discover here at U in the US primarily.
• 6:18
  SPEAKER_03: They in turn also have to be approved by the issuing bank.
• 6:21
  SPEAKER_03: So those tokens have a further and greater degree of approval and uh tied identity to those credentials for that specific merchant.
• 6:30
  SPEAKER_03: So yeah, it's been a pretty great evolution.
• 6:33
  SPEAKER_02: So okay.
• 6:34
  SPEAKER_02: Well, Ryan, I'd love to get your perspective on network tokenization, especially kind of as it relates to the broader industry landscape and kind of what's going on in that world today.
• 6:46
  SPEAKER_00: Yeah, thanks, Greg.
• 6:47
  SPEAKER_00: I think from my vantage point, um, yeah, what's really compelling about network tokenization is how it's really shifted from being a security control to a more broader strategic growth enabler for the entire payments ecosystem.
• 7:02
  SPEAKER_00: So, I mean, you know, if you take where we are today, network tokenization is really becoming table states.
• 7:08
  SPEAKER_00: You know, merchants using network tokens are typically seeing anywhere uh in the region of between three to six percentage points of authorization uplift.
• 7:16
  SPEAKER_00: Um and that's really a meaningful difference, right?
• 7:18
  SPEAKER_00: You know, especially when you think about the hundreds of millions of transactions that are being processed each day.
• 7:24
  SPEAKER_00: You know, and that and that's really not you know just because uh you know tokenization is is just swapping out a card number, right?
• 7:30
  SPEAKER_00: It's you know, it's some very critical trends and capabilities around network tokenization that's driving that adoption and that and that um capability.
• 7:39
  SPEAKER_00: So I think you know, three that I can think of really around you know lifecycle management being a big part of network tokenization.
• 7:46
  SPEAKER_00: You know, tokens obviously automatically update when a card is reissued or credentials change, which you know really helps cut down on unnecessary declines and and you know leads to a better consumer experience overall.
• 7:59
  SPEAKER_00: And I think you know, obviously, with the help of partners like NMI and uh GD, you know, we've really got to a point of interoperability and scale.
• 8:08
  SPEAKER_00: You know, tokenization is no longer really just scaled into one wallet or one merchant.
• 8:13
  SPEAKER_00: You know, there's really a collaboration across across networks, you know, issuers, gateways, merchants, and you know, everyone's really working together now in terms of you know being able to use those capabilities.
• 8:24
  SPEAKER_00: And then that's really important, right?
• 8:26
  SPEAKER_00: You know, especially as we're you know entering a world where you know payments become more embedded, you know, more intelligent.
• 8:32
  SPEAKER_00: And you know, we're we're gonna we're getting to a point, I guess, where you know things like agents are starting to act on behalf of consumers and merchants, right?
• 8:40
  SPEAKER_00: So, you know, tokens really do provide uh the the ability for merchants and issuers to make sure that they gain insights and trust as part of the inbuilt capability of the token itself.
• 8:51
  SPEAKER_00: So, yeah, uh, you know, I think as an industry we've really been raising the bar on what tokens can do.
• 8:56
  SPEAKER_00: And it's not really just about processing transactions, but really helping drive, you know, drive business outcomes.
• 9:01
  SPEAKER_00: So higher conversion, stronger retention, less fraud, and eventually becoming you know invisible infrastructure for commerce as a whole.
• 9:10
  SPEAKER_02: Okay, I think that's a great segue into the next question, which I really want to be a group discussion.
• 9:17
  SPEAKER_02: So, Mark, I'm gonna point the question at you, but Tiffany, Ryan, please, please jump in.
• 9:21
  SPEAKER_02: And what we're gonna do is kind of break down the value of tokenization into five areas.
• 9:27
  SPEAKER_02: So let's walk through each of those and have you give us your thoughts.
• 9:31
  SPEAKER_02: So the first one is higher authorate.
• 9:35
  SPEAKER_02: So, Mark, thoughts on that one?
• 9:37
  SPEAKER_03: I think by its nature, a network token provides a greater degree of certainty from all the players participating in the transaction.
• 9:44
  SPEAKER_03: This is a credential that has been pre-designated by the issuer as an authentic token.
• 9:50
  SPEAKER_03: And therefore, when it is submitted for a transaction and it is tied to a specific merchant using a certain domain, right?
• 9:57
  SPEAKER_03: You can't use that network token if it's an e-commerce token to then do some type of point of sale or something along those lines.
• 10:04
  SPEAKER_03: So you're creating a scenario where everyone who's participating uh has seen this before, recognizes it, understands the format that which being used, and therefore creates a higher level of authorization rates.
• 10:16
  SPEAKER_03: Ryan uh mentioned some of those rates, and and those are pretty significant already.
• 10:21
  SPEAKER_03: Uh, we have some single use cases with certain specific merchants that are even dramatically more high than that authorization rate.
• 10:28
  SPEAKER_03: So it it's a it's a path by which these network tokens really provide a real advantage over just using regular optimum credentials.
• 10:37
  SPEAKER_01: I would agree with that because of those benefits, you know, and in MasterCard Visa, JP Morgan, there's a lot of studies out there where people quote, you know, a three to four percent uplift in authorization on top of meaningful reduction in online fraud.
• 10:50
  SPEAKER_01: But I will say within our NOI portfolio with the partners that have enabled network tokenization, we're seeing anywhere from a four to a 40% uplift in approval rates, uh, depending on the NCC, the scenario, the transaction type.
• 11:03
  SPEAKER_01: I would say that in our own portfolio, we're actually seeing even more positive results than some of the industry publications are quoting.
• 11:10
  SPEAKER_02: Okay.
• 11:11
  SPEAKER_02: So the next value that tokenization brings is optimized interchange rates.
• 11:16
  SPEAKER_02: So, Mark, can you start the conversation there?
• 11:19
  SPEAKER_02: Sure.
• 11:20
  SPEAKER_03: I mean, so the easy thing we're at the surface is some of the networks are actually providing a discounted interchange rate for using a network token versus a credential that is not a network token.
• 11:29
  SPEAKER_03: So that's right off the top, is the easiest thing to point to.
• 11:32
  SPEAKER_03: But there's also create an opportunity here for payment orchestrators or optimizers.
• 11:37
  SPEAKER_03: Uh, and this can be it's a state alone company or it can be a service provided by a company like NMI that provides merchants that ability to sort of leverage the token to make sure that they are getting the best possible interchange rate at that moment in time for that transaction for that consumer and leveraging that information correctly.
• 11:56
  SPEAKER_03: So that's that's this worsening on our end.
• 11:59
  SPEAKER_02: And Ryan, I don't know, being that you're you're one of those companies who decides some of those interchange rates, if you have any thoughts there.
• 12:07
  SPEAKER_00: Yeah, I mean, I guess when you know rent authorizations improve and and and declines drop, you know, interchange dynamic dynamics and processing efficiency improve too, right?
• 12:16
  SPEAKER_00: So uh, you know, fewer costs from lost revenue and and declines in in re you know, having to reprocess transactions.
• 12:23
  SPEAKER_00: So uh, you know, I think it's uh an important capability.
• 12:27
  SPEAKER_02: Yeah, I think the next one is is kind of a big one because you know, I continue to hear in conversations that I have around fraud and chargebacks, obviously part of that.
• 12:36
  SPEAKER_02: But I think the the fraud, the fraudsters are getting smarter and better every day.
• 12:41
  SPEAKER_02: And and if this is a way that can help with that, I think that's huge.
• 12:44
  SPEAKER_02: So, Mark, any any initial thoughts on that one?
• 12:47
  SPEAKER_03: I think we've touched on this a little bit already, but going back to the certainty of understanding who this person is and where that credential came from, it is a very, very big factor here.
• 12:56
  SPEAKER_03: Uh mentioned earlier that if this credential is somehow stolen or compromised, that really the utilization of that token can't really be used anywhere, right?
• 13:05
  SPEAKER_03: You can't take a token from Merchant ABC and try to use it at Merchant XYZ, it's it's not gonna work.
• 13:12
  SPEAKER_03: As some of these services continue to evolve, we're gonna start seeing more and more of a device-bound token, right?
• 13:19
  SPEAKER_03: So, so if this token is used on my PC, it can't be used on a fraudster's phone, right?
• 13:26
  SPEAKER_03: So this is further enabling that.
• 13:29
  SPEAKER_03: Whereas if they just had my simple payment credentials or even potentially a non-network token, those capabilities might allow more fraud to happen.
• 13:37
  SPEAKER_03: I think part of chargebacks is also something that's uh maybe a little bit more of a psychological element for consumers.
• 13:43
  SPEAKER_03: Life cycle management plays into this.
• 13:46
  SPEAKER_03: If a merchant has an up-to-date uh credential for me as a consumer, they don't miss a payment, they don't miss a month, or I don't miss a payment on a monthly recurring transaction, preventing the change where three months from now they finally get an updated credential, and now I have a large transaction coming through from this recurring subscription.
• 14:06
  SPEAKER_03: I may challenge that as a chargeback as a consumer because I didn't notice that the two past two months weren't even charged to me, right?
• 14:12
  SPEAKER_03: So I think this is fraudulent on behalf of the merchant.
• 14:15
  SPEAKER_03: I'm challenging it as a chargeback.
• 14:17
  SPEAKER_03: And basically it's creating a whole lot of work for a whole lot of people that's not necessary where if you have that current credential all the time, I'm accustomed to seeing that$15 a month charge.
• 14:25
  SPEAKER_03: So it's that it doesn't throw me off when all of a sudden it's$65 because there's been multiple months being charged at the same time.
• 14:32
  SPEAKER_03: So that's some of the simple applications of it, I think.
• 14:35
  SPEAKER_01: Yeah, and I think from an issuer perspective, when they see a transaction that comes through that has a 3DS cryptogram or a network token cryptogram, they know more about it.
• 14:43
  SPEAKER_01: They know that that card was tied to a device, um, like Mark talked about.
• 14:47
  SPEAKER_01: And they're less likely, I mean, issuers have auto-charbeback rules and they they take a look at some of these um transaction types with additional detail and they'll be more discerning about what goes through the auto chargeback process.
• 14:59
  SPEAKER_01: And that has ripple effects.
• 15:01
  SPEAKER_01: And just a story about one of our customers at NMI who uses network tokens, they are a partner, they specialize in subscription services and they work with merchants ranging from very high-end exclusive restaurants to yacht clubs to alumni student groups to men's clothing.
• 15:18
  SPEAKER_01: Like they're they're across the board in terms of the direct-to-consumer merchants that are using their subscription services.
• 15:24
  SPEAKER_01: And since working with NMI and implementing our products called Customer Token Vault, because it joins our Gateway token and our network token together.
• 15:33
  SPEAKER_01: This partner of ours has seen a 28% increase in approval rates and their blended interchange cost across the networks is saving about seven to eight basis points.
• 15:43
  SPEAKER_01: And they're seeing a reduction in fraud and and chargebacks that are coming across.
• 15:47
  SPEAKER_01: So it's just it's kind of hit the big core benefits in this use case.
• 15:51
  SPEAKER_01: And especially in this environment where we see an uptick in AI fraud.
• 15:56
  SPEAKER_01: I think AI is growing all around us, and we see an uptick in restrictions, things like the visa program that are creating higher thresholds or what we have to hit in terms of you know dispute rates and fraud rates.
• 16:08
  SPEAKER_01: Network tokens is really an important tool for merchants to have in their belt to be able to get ahead of those constraints.
• 16:15
  SPEAKER_00: Yeah, I agree.
• 16:16
  SPEAKER_00: I mean, Tiffany, Mark, you touch on great, great points that, right?
• 16:20
  SPEAKER_00: And you both make the point that the tokens are essentially cryptographically tied to either a device or they have a lot more context to them as well, right?
• 16:29
  SPEAKER_00: So, you know, for an issuer, you know, the aspects of the token are the data elements that obviously flow to them, right?
• 16:35
  SPEAKER_00: So they get a lot more context on the transaction, you know, be it being tied to a specific merchant or even in the case of AI that you're referencing there, Tiffany, you know, we're we're kind of moving to also being able to explain to the issuer who the agent was involved in in this transaction, right?
• 16:53
  SPEAKER_00: So I think um, you know, tokenization really does you know provide uh uh not just a security around the credential itself, but the the context of the transaction, which I think is really important, and especially when you're you know combining that with authentication and authentication tools, you know, so being able to you know tie that credential with someone's identity, um, you know, that's that's a really major reduction in risk for an issuer.
• 17:18
  SPEAKER_02: Okay.
• 17:18
  SPEAKER_02: And the next one, and I I think, you know, Mark, you and Tiffany kind of mentioned this a little bit, but you know, the recurring payments space, so making those payments smoother and easier.
• 17:28
  SPEAKER_02: So, Mark, you want to talk to that for a minute?
• 17:31
  SPEAKER_03: I think we all probably have experienced this a little bit recently, but he turned back the clock a decade ago.
• 17:35
  SPEAKER_03: We all received a couple of emails a month asking us to update our credentials, right?
• 17:38
  SPEAKER_03: For any type of subscription service we had, or even it's just a an online merchant that we use with any frequency.
• 17:44
  SPEAKER_03: And those have they're not they don't not exist at all anymore, but the frequency at which we receive them is very minimal.
• 17:51
  SPEAKER_03: So what is happening is we're getting these automatic lifecycle management notifications for our credentials.
• 17:57
  SPEAKER_03: So if my card is just expired or lost or stolen, whatever the case might be, I as a consumer no longer need to go into each one of my subscription services, which is growing every year, by the way, of the number of subscriptions that we all have, to update my credentials.
• 18:13
  SPEAKER_03: So for a couple scenarios there, right?
• 18:15
  SPEAKER_03: So that used to be a path by which people ended their subscriptions, right?
• 18:19
  SPEAKER_03: I'm not gonna give that company my new expiration date.
• 18:21
  SPEAKER_03: So therefore my subscription will ultimately end.
• 18:24
  SPEAKER_03: So this for a merchant sits there and says, well, we're not gonna lose retention, which I know is a big part of their business models simply because we don't have an updated credential.
• 18:35
  SPEAKER_03: Also, in the past, merchants were facing somewhere between, depending on which statistics you read, they were from$20 to$70 of cost just to get an updated credential for a customer.
• 18:46
  SPEAKER_03: So this is something that's happening automatically.
• 18:48
  SPEAKER_03: They don't notice that it happens as far as merchant is concerned, and and it's business as usual.
• 18:53
  SPEAKER_03: So I think this is really, from my perspective, a place where network tokens really shine, because this is something that was a true pain point before that is sort of disappearing day by day.
• 19:04
  SPEAKER_00: Yeah, I think, I think, I think you're right there, Mark.
• 19:07
  SPEAKER_00: You know, I I've I've I mean I certainly noticed this when I'm you know talking to merchants about you know enabling network tokens, that um I always kind of look at it from the perspective of the consumer and the user experience that that they get in a result of a decline transaction.
• 19:21
  SPEAKER_00: You know, a decline transaction that didn't necessarily have to happen because there are updated credentials available if if that if they were using you know tokenization.
• 19:31
  SPEAKER_00: So um, you know, and whilst you know there's obviously always the opportunity for that consumer to enter another credential or another payment method, it did result in a bad experience, right, for that consumer.
• 19:42
  SPEAKER_00: So that consumer then has the optionality and you know they they know they've had that bad experience and maybe they they go elsewhere.
• 19:49
  SPEAKER_00: So um, you know, I think removing those friction points is is a is a really you know great benefit to network tokenization.
• 19:56
  SPEAKER_02: And then the last one that we're gonna touch on kind of the value of network tokenization, and and Mark mentioned it a little bit already, the stronger customer retention, being able to keep those customers longer.
• 20:07
  SPEAKER_02: So, Mark, any other thoughts on that one?
• 20:10
  SPEAKER_03: No, yeah, just reiterating, I think, what everyone's been saying, I mean, it it's a better experience, right?
• 20:14
  SPEAKER_03: I don't have complications.
• 20:16
  SPEAKER_03: Uh, I may be trying to run a transaction though and I'm running out the door to go pick my daughter at field hockey or something along those lines.
• 20:24
  SPEAKER_03: And I don't have time to enter in new payment credentials.
• 20:27
  SPEAKER_03: I don't have time to update something.
• 20:30
  SPEAKER_03: And whether that is just an inconvenience for me or a lost transaction for the merchant because I never remember to go back to do that, or it's just more simple to get that same product from another merchant who isn't going to have that hurdle there for me because uh it's entered my credentials more recently.
• 20:46
  SPEAKER_03: You know, in this scenario, lifecycle management, higher authorization rates, which we've all been mentioning, which is just a cleaner, faster, more convenient experience.
• 20:54
  SPEAKER_03: I'm gonna enjoy my experience and I'm more likely to come back and spend more money with that same merchant.
• 20:59
  SPEAKER_03: So I think it's uh it's it's a culmination of all the different points we've been talking about to this point.
• 21:06
  SPEAKER_01: Agree.
• 21:06
  SPEAKER_01: And you know, the subscription economy is massive and it's growing.
• 21:11
  SPEAKER_01: And I read a stat a few months ago from payments.com that said a third of subscription consumers, when when a merchant churns subscription consumers, a third of it's because of payment interruption issues.
• 21:22
  SPEAKER_01: Because, like Mark said, if you're sitting on the couch on a Friday night and your Hulu account doesn't renew, you just go to Netflix, right?
• 21:29
  SPEAKER_01: It it's so convenient.
• 21:30
  SPEAKER_01: There's so much competition out there, you just go to where your payment is is adopted.
• 21:34
  SPEAKER_01: And talking about kind of that that evolution of, you know, a decade ago, you used to have to go in and remember every time you reported your your credit or debit card loss stolen.
• 21:44
  SPEAKER_01: You had to remember all the places it was on the file and go in and re-key it.
• 21:48
  SPEAKER_01: And then the next evolution was this account updater concept, which was great and novel and it was automatic, but it was all on batch.
• 21:56
  SPEAKER_01: You know, the issuer would maybe take a couple of weeks or a couple of months to update the new card credential to the network.
• 22:02
  SPEAKER_01: And then the merchant would take a couple of weeks or a couple of months to download it to update the credential on file.
• 22:08
  SPEAKER_01: And that all gets, which was great, and there's great evolution, but that all gets completely irreal time now with lifecycle management, where when you go to your bank and say my card's lost stolen, Netflix now has your card credential within minutes because of that lifecycle management update, which in a world where subscription economy, a third of their business is walking out the door because of payment interruption, this lifecycle management, I think it will be really, really helpful.
• 22:34
  SPEAKER_01: And of course, that's on top of the higher approvals, the fewer declines, the better chargebacks.
• 22:39
  SPEAKER_01: Um, but that uninterrupted recurring billing, I think, is really key to the value prop and the customer retention here.
• 22:45
  SPEAKER_02: Okay, so Tiffany, I'm gonna stick with you for this next question.
• 22:49
  SPEAKER_02: What do you think the future of tokenization looks like?
• 22:52
  SPEAKER_01: So I have three predictions for network tokens.
• 22:55
  SPEAKER_01: Um, first, I think it becomes the default for card not present, you know, because of lifecycle updates and the value, I think it becomes even more pervasive.
• 23:04
  SPEAKER_01: I think secondly, the idea of tokenization will move beyond cards.
• 23:09
  SPEAKER_01: We'll start to see it more in open banking, the account to account, um, other alternative payment methods.
• 23:15
  SPEAKER_01: And then thirdly, with the world of AI exploding around us, I think tokens will be leveraged to predict declines, do low-cost routing, fight fraud.
• 23:26
  SPEAKER_01: Um, so I think, especially in the world of agentic commerce, you know, at its emphasis, I think tokenization just at the beginning.
• 23:34
  SPEAKER_02: Okay.
• 23:35
  SPEAKER_02: Ryan, any thoughts?
• 23:36
  SPEAKER_00: Yeah, absolutely.
• 23:37
  SPEAKER_00: I guess I'll follow on from that theme that Tiffany raised around agentic commerce.
• 23:42
  SPEAKER_00: I think I think that really is the next frontier for for tokens.
• 23:45
  SPEAKER_00: Um, you know, I think we're we're already in a world where we're seeing over half of uh US consumers moving from traditional search engines to you know to leverage Gen AI to support their shopping needs.
• 23:58
  SPEAKER_00: So um, you know, I think that the tokens are obviously going to be key here, right?
• 24:02
  SPEAKER_00: You know, where you know agents are acting on behalf of consumers and and businesses to execute transactions, you know, they're gonna need to be secure, right?
• 24:12
  SPEAKER_00: They're gonna need to be trusted.
• 24:14
  SPEAKER_00: You know, really in a world where you can imagine your own sort of a system, your own digital system, maybe booking your travel or um you know paying a bill or renewing a license for you.
• 24:23
  SPEAKER_00: There's there's real you know, real kind of you know boundaries that you have to define there to kind of ensure that there's trust in the ecosystem in those those user experiences.
• 24:33
  SPEAKER_00: And I think that's really where tokenization becomes you know critical.
• 24:36
  SPEAKER_00: You know, obviously, as we've been talking about, it takes you know the sensitive account information and and um makes sure that it can be used safely across uh you know any device, any any channel, any ecosystem.
• 24:48
  SPEAKER_00: And that's really where you know tokens has become the foundation for agentic, you know, agentic commerce.
• 24:54
  SPEAKER_00: And you know, when you're combining that with things like you know, agent registration or biometric authentication and those kind of conversational interfaces that come with with Gen AI, that's you know, that's really where I think we'll see the the power of this this capability come to come to life.
• 25:12
  SPEAKER_00: You know, and I think you know, MasterCard's role is going to be really important in that in terms of making sure that that where the world is becoming more autonomous, you know, trust has to travel with with every transaction there as well.
• 25:23
  SPEAKER_00: So um, you know, whether that's initiated by a person or a device or uh an agent, you know, tokenization has really laid laid the rails for this next wave of uh of of commerce.
• 25:35
  SPEAKER_02: Okay.
• 25:35
  SPEAKER_02: Mark, any thoughts on the feature?
• 25:37
  SPEAKER_03: Uh both Tiffany and Ryan you know covered that very, very uh thoroughly.
• 25:40
  SPEAKER_03: I think the only addition I would have is I think we have this this other great additional tool, pass keys.
• 25:46
  SPEAKER_03: And I think you'll start seeing more examples of tokens and pass keys being used together, uh, whether that be once again about using uh asynchronous or synchronous devices, right?
• 25:55
  SPEAKER_03: So sort of depending on kind of merchant or or or how much you're using in those cases, uh, the really kind of further leverage the knowledge that this person is who they say they are.
• 26:05
  SPEAKER_03: And I think you'll start seeing more combinations of those.
• 26:08
  SPEAKER_03: Uh, I think super long term, you're gonna start seeing like ID tokens, right?
• 26:12
  SPEAKER_03: And that will also probably be something that is combined with the use of the network token because you're leveraging, once again, who this person is, the the uh authority or mandate that they give in an agentic AI transaction to actually provide payment in this scenario.
• 26:28
  SPEAKER_03: And and those are all going to get tied together and kind of have a central sort of meeting point, I believe.
• 26:33
  SPEAKER_03: But uh that's but otherwise covered very thoroughly.
• 26:37
  SPEAKER_02: Okay, great.
• 26:38
  SPEAKER_02: So, Tiffany, can you tell us a little bit about the relationship between GD and NMI?
• 26:44
  SPEAKER_01: So, Mark mentioned in his intro, you know, GD is a longtime leader in tokenization and digital payment enablement.
• 26:50
  SPEAKER_01: So they specialize in everything from token provisioning, lifecycle management, digital assurances, like pass keys, like you just mentioned.
• 26:57
  SPEAKER_01: And there's a lot of subject matter expertise that comes with that.
• 27:00
  SPEAKER_01: And then at NMI, we have built all of those network token benefits we've talked about, the you know, the lower fraud rates, the less friction, the lifecycle management.
• 27:09
  SPEAKER_01: We make network tokens available to our channel or ecosystem of partnerships without additional integrations or development.
• 27:15
  SPEAKER_01: So I would say together, GD and NMI, we really complement each other.
• 27:19
  SPEAKER_01: And um, we help our network adopt tokens very quickly, securely at enterprise scale with just a simple configuration because we've done the heavy lifting that all taps into the great network work that MasterCard and the other networks have done from a token service perspective.
• 27:35
  SPEAKER_02: Okay, great.
• 27:36
  SPEAKER_02: So, one last question for the three of you.
• 27:38
  SPEAKER_02: And Ryan, I'm gonna start with you.
• 27:41
  SPEAKER_02: What is the one takeaway you'd like the listeners to come away with from this conversation when it comes to network tokenization?
• 27:48
  SPEAKER_00: Yeah, I I think from my perspective, it's just kind of understanding that network tokenization isn't really just a security upgrade.
• 27:55
  SPEAKER_00: Um, you know, it's the foundation for really the next generation of digital commerce.
• 28:01
  SPEAKER_00: You know, tokens really enable safer, smoother, smarter interactions.
• 28:06
  SPEAKER_00: And so, you know, when you layer that with new technologies or capabilities like agentic commerce, payments become so seamless because they use these tokens, right?
• 28:15
  SPEAKER_00: They recede into the background.
• 28:17
  SPEAKER_00: And you know, merchants and consumers can then focus on the value that they're getting from these transactions versus you know any friction that might might be there.
• 28:25
  SPEAKER_00: Um, so yeah, that that's my main takeaway and you know, proud to be you know leading that transformation and very excited about what comes next.
• 28:33
  SPEAKER_02: Okay, so Tiffany, over to you.
• 28:35
  SPEAKER_02: What's the what's the one takeaway you want the listeners to come away with from this show?
• 28:39
  SPEAKER_01: Um at the end of the day, payments, they're not just a back office function.
• 28:43
  SPEAKER_01: It's a critical part of the customer experience.
• 28:45
  SPEAKER_01: And network tokens, it might seem scary and complicated and cryptograms.
• 28:49
  SPEAKER_01: And don't be afraid or intimidated.
• 28:51
  SPEAKER_01: You have great partners to lean on, like GND and NMI and MasterCard that have done a lot of heavy lifting to make it seamless for our partners and our merchants.
• 29:00
  SPEAKER_01: So don't be intimidated and just realize that network tokens are it's not just a security feature, it's a business lever.
• 29:06
  SPEAKER_03: Okay.
• 29:07
  SPEAKER_03: Mark, your your thoughts.
• 29:09
  SPEAKER_03: Yeah again, uh Ryan Tiffany uh covered uh almost the bases there.
• 29:13
  SPEAKER_03: I think the only thing I would say is, you know, tokenization in general, existence for 20 plus years, right?
• 29:18
  SPEAKER_03: Network tokens for the past 10 years, adoption is happening very rapidly right now.
• 29:22
  SPEAKER_03: It's not a finished product.
• 29:24
  SPEAKER_03: Yeah, don't know that it ever will be, right?
• 29:26
  SPEAKER_03: So I think it's it's a foundational layer, like Ryan was mentioning, that that can be built upon, where there will be more and greater features and more ways to utilize it.
• 29:34
  SPEAKER_03: So participating in it and getting it as part of your uh operating system makes you prepared for the next great feature that will be used to use network tokens on that might include other types of express payment options and things of that nature.
• 29:49
  SPEAKER_03: So it's it's something that's important for uh merchants and processors to get on board with because it's going to be sort of what the future is built upon.
• 29:56
  SPEAKER_02: Okay.
• 29:56
  SPEAKER_02: I think that's a great way to wrap up the show.
• 29:58
  SPEAKER_02: So, Mark, Tiffany, Ryan.
• 30:00
  SPEAKER_02: Ryan, thank you so much for being on the show today.
• 30:02
  SPEAKER_02: I know your time is very valuable, so I really appreciate you being here.
• 30:04
  SPEAKER_00: Thanks, Greg.
• 30:06
  SPEAKER_01: Thanks for having us.
• 30:06
  SPEAKER_01: Great conversation.
• 30:07
  SPEAKER_02: Thank you.
• 30:08
  SPEAKER_02: Good to see everybody again.
• 30:09
  SPEAKER_02: And to all you listeners out there, I thank you for your time as well.
• 30:12
  SPEAKER_02: And until the next story.