Mastercard is phasing out the introduction of cards for e-commerce in Europe by 2030

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LONDON — Payments for online products and services could look very different in the coming years.

Starting from 2030 MasterCard will no longer require Europeans to manually enter their card numbers when paying online – regardless of the platform or device they use.

On Tuesday, during an evening chat with CNBC, Mastercard will announce that by 2030, all cards it issues on its network in Europe will be tokenized.

In other words, instead of the 16-digit card number we are all accustomed to using for transactions, it will be replaced with a randomly generated “token”.

The company says it is working with banks, fintechs, merchants and other partners to phase out manual e-commerce card entry in Europe by 2030 in favor of a one-click button across all online platforms.

This will keep consumer cards safe from fraud attempts, Mastercard says.

Users won’t have to enter passwords every time they try to make a payment as Mastercard introduces keys to replace passwords.

It will also enable customers to make one-click payments at checkout using biometric thumbprint authentication.

Cards stored on a merchant’s website or in an e-wallet using tokenization can be automatically updated wherever they are stored, when they are exchanged or renewed.

Reducing fraud

Mastercard claims that 100% tokenization on e-commerce sites will dramatically reduce fraud.

According to research firm Juniper Research, losses from online payment fraud will exceed $91 billion by 2028, which will globally amount to more than $362 billion over the next five years.

According to Mastercard, the use of tokenization is growing at a rate of 50% each year and currently secures approximately 25% of all e-commerce transactions globally on its network.

Mastercard said it was making changes to Europe because the continent has long been a leader in payments innovations such as contactless payments and online banking, which allow bank users to share their account details to access new financial products.

“In Europe, we have seen tokenization gain momentum across the ecosystem, with the convenience and reduced fraud rates selling themselves,” Valerie Nowak, executive vice president of product and innovation at Mastercard Europe, said in a statement.

“We are confident that achieving this vision by 2030 will benefit shoppers, retailers and card issuers alike.”

The future of payments

From the first appearance of credit cards in the 1950s and 1960s, to the shift toward paying for things online that came with the widespread adoption of the Internet in the early 21st century, the ways we pay have changed some quite dramatically over the years. decades.

In the early introduction of credit cards, bank officials would check card numbers against a bad number book or call the issuing bank to verify that the person making the payment was who they said they were.

The primary method of paying with a credit card at the checkout was so-called zip-zap machines, which printed card numbers on carbon paper packages.

This was the case until the 1970s and 1980s, when magnetic stripes and electronic payment terminals dominated.

Their successors were cards with microchips, which recorded data about the card owner, its number and expiration date.

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Mastercard is betting that the move to a new, “embedded” payment system will be as radical a change as the move to chip and PIN or the adoption of contactless payments, which are now widely used in advanced economies around the world.

The company says its technology will make paying for products online as seamless as making contactless payments in a store. He says this means consumers will be able to make one-click payments on any device, including smartwatches, home assistants and even cars.

For example, Mastercard is partnering with Mercedes-Benz, which allows the carmaker’s customers to use their car’s fingerprint sensor to make digital payments at more than 3,600 gas stations across Germany.