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Collecting payments isn’t without its challenges — especially when fraud and cybersecurity come into play. Declined transactions, outdated card information and fraud prevention regulations can all create unnecessary friction and disrupt cash flow. Unfortunately, these issues don’t just affect payment professionals; they can also impact merchants and end customers, resulting in a less than ideal payment experience.
One way to avoid these challenges is by adopting network tokenization. Network tokens go beyond standard encryption to replace static card data with dynamic, secure tokens issued by the big card networks like Visa and Mastercard. With network tokenization, businesses can reduce transaction failures, streamline processing and improve overall reliability for merchants and their customers. Over time, this not only makes transactions more secure, but leads to stickier, more satisfied customers.
Below, we’ll examine how we at NMI have integrated network tokenization into our own operations, and how the same technology can help independent sales organizations (ISOs), software providers and their merchants save money, streamline recurring and subscription-based payment collection, and offer an enhanced payment journey to end-users.
The Challenge: Efficient and Reliable Fee Collection
At NMI, we provide payment enablement technology to a variety of merchants through our partners, invoicing and processing a significant number of direct fee payments each month. That requires a billing system that can handle high volumes of transactions with minimal friction.
One of the key challenges we face is the fast and reliable collection of all those invoice payments — most of which are made automatically using a stored card-on-file. But cards can expire, card information can change and payments can be declined by issuers security rules. These issues can delay fee collection, disrupt cash flow and increase collection efforts. In the worst case, they can even create a disruption of service for our users.
The Solution: Using Network Tokenization to Solve the Problem
To meet this particular challenge, we introduced NMI Customer Token Vault as a Gateway extension, which supports network tokens. By leveraging network tokenization and replacing static card details with dynamic, merchant-specific tokens, we eliminated most of the issues caused by outdated card information or issuer fraud rules.
Now, if a merchant’s card is replaced, the token is automatically updated directly at the source, reducing failed transactions and preventing disruptions in fee collection. And because network tokens come directly from the largest, most trusted organizations in the industry, issuer fraud rules rarely flag them, boosting success rates even further.
Results: Faster Collections, Fewer Declines
The integration of these products has transformed the way we collect fees from merchants. Since implementing network tokenization across our billing system, we’ve seen:
- A 33% reduction in overall decline rates (excluding insufficient funds), meaning fewer failed transactions and more timely fee collection
- A 95% reduction in declines due to suspected fraud. Network tokens offer enhanced security, which means issuers trust transactions processed with network tokens over standard encryption and are more likely to approve them
- More than 90% of credit cards successfully tokenized, ensuring consistent, uninterrupted payments from merchants
In addition to improving our internal approval rates, these improvements also directly benefit our partners by ensuring their residuals are collected and paid out faster. That ensures they can count on predictable, consistent cash flow.
Why This Matters for ISOs and Software Platforms
As we streamline our fee collection, we’re also demonstrating to our partners how their merchants can benefit from these same products to optimize payment acceptance.
By utilizing Customer Token Vault and network tokenization in combination with our other products, like NMI Payments and the NMI Gateway, ISOs and software providers can offer their merchants the same improvements we’ve enjoyed internally. The reductions in fraud, declined cards and false positives (such as a transaction incorrectly-flagged for fraud) lead to smoother transactions, fewer disputes and a better experience for end customers, which ultimately enhances the merchant’s trust in their payment solutions provider and strengthens long-term relationships.
Network tokenization through Customer Token Vault isn’t just a technical upgrade; it’s a strategic advantage that enables smoother transactions and stronger relationships between providers, merchants and their end customers. By sharing our experience, we aim to inspire new ways of thinking and emphasize that innovation is most impactful when it offers real-world benefits to everyone.
Current Customer Token Vault users can unlock network tokens with no additional development — just contact your account manager for more information.
Saving money and maximizing approval rates has never been easier. To learn more about NMI Customer Token Vault and how we’re ensuring our partners can transact safely and seamlessly through network tokenization, reach out to a member of our team.
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