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LONDON — The experience of paying for products and services online could feel a lot different in the coming years.
Starting from 2030, Mastercard will no longer require Europeans to insert their card numbers manually when checking out online — no matter what platform or device they’re using.
Mastercard will announce Tuesday in a fireside chat with CNBC 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’re all accustomed to using for transactions, this will be replaced with a randomly-generated “token.”
The firm says it’s been working with banks, fintechs, merchants, and other partners to phase out manual card entry for e-commerce by 2030 in Europe, in favor of a one-click button across all online platforms.
This will ensure that consumers’ cards are secure against fraud attempts, Mastercard says.
Users won’t have to keep entering passwords every time they try to make a payment, as Mastercard is introducing passkeys that replace passwords.
It will also enable customers to make one-click payments at checkout using biometric authentication with a thumbprint.
Cards stored in a merchants’ page or electronic wallet via tokenization can be automatically updated wherever they’re stored when they’re replaced or renewed.
Reducing fraud
Mastercard says 100% tokenization across e-commerce sites will reduce fraud rates dramatically.
According to market research firm Juniper Research, losses from online payment fraud is expected to exceed $91 billion by 2028 — totaling more than $362 billion globally over the next five years.
Adoption of tokenization, Mastercard says, has been increasing at a rate of 50% each year and now secures about 25% of all e-commerce transactions globally across its network.
Mastercard said it’s rolling out the change in Europe as the continent has long been a leader in payments innovations, such as contactless payments and online banking, which allowed banking users to share their accounts’ data to access new financial products.
“In Europe we have seen tokenization gaining momentum across the ecosystem, the convenience and reduced rates of fraud sell themselves,” Valerie Nowak, executive vice president, product and innovation at Mastercard Europe, said in a statement.
“We are confident that reaching this vision by 2030 is a win-win-win for shoppers, retailers and the card issuers alike.”
Future of payments
From the arrival of credit cards for the first time 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 2000s, the ways we pay have undergone a few pretty dramatic changes throughout the decades.
In the early days when credit cards were first introduced, bank clerks would check card numbers against a book of invalid numbers or call the issuing bank to check the person making the payment is who they say they are.
So-called “zip-zap” machines that would imprint card numbers on carbon paper packets were the primary way of paying via credit card at the checkout counter.
That was until the 1970s and 1980s, when magnetic stripes and electronic payment terminals took over.
They were succeeded by cards with microchips that stored data on the card’s owner, number, and expiry date.
Mastercard is betting its move toward this new “embedded” payment system will be as dramatic a shift as the move toward chip and PIN, or the adoption of contactless payments, which are now widely used in developed economies across the world.
The company says its technology will make the experience of paying for items online as smooth as making a contactless payment in-store. It says it means that consumers will be able to make payments with one click across any device including smartwatches, home assistants, and even cars.
For example, Mastercard has a partnership with Mercedes-Benz that allows the automaker’s customers to use a fingerprint sensor in their car to make digital payments at more than 3,600 service stations across Germany.