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juspay / hyperswitch

An open source payments switch written in Rust to make payments fast, reliable and affordable
https://hyperswitch.io/
Apache License 2.0
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[FEATURE] Network Tokenization #5274

Open tinu-hareesswar opened 1 month ago

tinu-hareesswar commented 1 month ago

What is Network Tokenization?

Tokenization is a process of replacing sensitive card information to a unique, non-sensitive equivalent, known as a token. This token is provisioned and managed by the network (e.g. VISA, Mastercard etc.) and can be used for transactions instead of your actual card number. A token is specific to the token requestor (merchant).

Benefits

  1. Enhanced Security

    • Potential points of leakage of sensitive data is reduced
    • Data breaches of tokens is of no use to hackers

  2. Improved Auth rates

    • Networks have more confidence in the authenticity of the transaction, as richer data is carried with the token
    • Earlier few of the declines were due to expired or invalid card data

  3. Reduced fraud

    • Visa has seen 26% reduction in frauds (payments volume)

  4. Reduced compliance risks

    • Merchants don’t store sensitive data, & hence reduced compliance assessment scope

  5. Up-to-date cardholder information - even if the card is lost/expired/reissued.

Drawbacks

  1. Tightly coupled with networks
  2. Merchants lose control over network selection
  3. Cost based routing of networks by merchants will be hampered especially with large merchants

Use-cases

  1. For subscription & repeat (MIT and CIT) based businesses:
    • Ideal for businesses with recurring bill payments.
    • Once tokenized, the network ensures automatic updates of card information, eliminating disruptions due to expired cards.
    • Support PG agnostic mandates improving authorization rates of the transaction