Global retail e-commerce sales are forecast to grow to $6.8 trillion and capture 24% of global retail sales by 2028, according to Forrester.
Within this increasingly digitalised economy, consumers are raising their expectations of what they want from a checkout experience. For merchants, cart abandonment due to an unsatisfactory checkout experience is becoming a growing area of concern, with
the
Baymard Institute finding 70% of shoppers discard their online cart before making a purchase.
Tokenisation at checkout has emerged as a significant option for businesses to improve their ecommerce offering as we move into 2025. We spoke with Alexa von Bismarck, president EMEA at Adyen, and Mark Barnett, president Europe at Mastercard about growing
e-commerce through tokenised checkouts.
A changing e-commerce ecosystem
The reasons consumers abandon carts vary, yet payment experience and options at checkout play a significant role. The
Adyen Index found that 54% of consumers will abandon their purchase when the payment option they want is not available. Additionally, the Baymard Institute found that 25% of people they surveyed abandoned their cart due to a lack of trust to give over their
card information, 22% if the checkout took too long, and 13% if there weren’t enough payment methods on offer.
When looking at shopper’s needs, von Bismarck said they classify these into the “three C’s”: context, control and convenience. She explained that this goes beyond “just allowing for the right payment method. It's also about making sure that it's a secure
checkout, that you are seeing your preferred payment method that you are accustomed to and that it's an easy process.”
Payment preferences are evolving fast but for merchants it can be imperative they keep up with changing trends, while maintaining security and efficiency. This can feel like a lot of pressure for merchants, but von Bismarck argued that if they lag behind
it is “money they're missing out on. Those customers have actually made the decision to buy, and then they're dropping off because the payment is not working according to their expectation.”
Looking at this, we can see that in order to keep pace with the industry and meet customer expectations, merchants need to make their checkouts efficient and secure, while also providing a variety of payment options. Offering tokenised payments as an option
at checkout is one way merchants can meet these needs for consumers.
Improving e-commerce security through tokenisation
Security at checkout is a serious sticking point for consumers and this is not surprising when e-commerce fraud is expected to exceed $107 billion in 2029, from $44 billion in 2024, according to
Juniper Research.
Consumers are increasingly aware of the risks that surround them when making an online purchase, and are more likely to abandon their cart if they see the checkout as risky.
Tokenisation removes the need for a consumer to fill in their card details at all, giving an increased sense of security. For their part, Mastercard have already set themselves the target of 100%
tokenisation in Europe by 2030. Barnett explained: “We’ve got to balance convenience and fraud. You have a more secure ecosystem if there aren’t real card numbers flying around the internet.”
Tokenisation also allows customers to circumvent the concerns around data breaches. If your card was on file at a merchant you regularly shop with, a data breach on their end may have resulted in you being vulnerable to fraud. However, with tokenisation,
the merchant never actually has the consumer’s card number.
In many cases, the ideal end point for tokenisation is to have a biometric, such as facial ID or finger print, as authentication.
Mastercard are already reporting that their experience of using tokenisation reducing card abandonment and growing transaction approvals be three to six percentage points.
This does not mean that tokenisation is impenetrable, but it is keeping two steps ahead of the fraudsters who are always looking for new ways to get access to your money, Barnett explained. “We saw a lot of fraud in the physical world, then we invented chip
and pin, and then most of the fraud migrated to the e-commerce world, then we did secure customer authentication.
“The next step in the on this journey is tokenising everything. You take the real card numbers out of the system. We'll never be 100% secure, but it is part of a journey to try to put more security into the whole process.”
Describing the battle with fraud, von Bismarck said it is a “moving target” and commented: “I think that's how we have to look at it in the future, how the security protocol is going to be evolving with the new dimensions of fraud that we are facing.”
Creating a balance between security and efficiency
Given the current concerns around e-commerce fraud, most merchants will already be investigating what they can do to improve the security of their checkout. However, additional security checks can often cause extra friction, and as already noted, long checkout
times are a reason consumer abandon their cart.
A balance between security and efficiency is an ongoing battle in payments, but tokenisation can be a factor in achieving this.
Using tokenisation can increase efficiency for shoppers, von Bismarck described that “in a perfect world, it means you have your shopping cart and then you enter your email address, authenticate securely, and then immediately pay with the stored details
without needing to type anything else. It's a very convenient way.”
Using a tokenised payment option can then reduce the time taken for a purchase to be made and an initial reaction to tokenisation, there is not a large learning curve for shoppers. Barnett described tokenisation as “pretty much invisible” for consumers.
Additionally, there is a convenience for users when it comes to instances where a card gets lost, expires, or there is no need to update each of your subscriptions. As Barnett explained: “It will also enable consumers to keep track of where all their cards
are. In a tokenised world, I'll just be able to see all my cards on file, all my subscriptions. So in the end, it's a really good benefit for consumers.”
Tokenisation at checkout in 2025
Despite the benefits available from tokenisation, some may be reluctant to invest in the technology and infrastructure.
From von Bismarck’s perspective, this is a matter of prioritisation from many merchants, most of whom can see the benefits of tokenisation. “The easier we can make it, the more likely our customers are to adopt it.”
She explained that it is also about making sure merchants can clearly see the benefits for them: “It's not just security for customers, it is also because issuers prefer those sort of payments, because they know they're ‘good’ transactions. Your performance
is going to go up, so the acceptance is going to go up, and you have less declined transactions. If that is very clear and easy to see, then, as an example, a subscription business that has customer churn because the cards are expiring is more likely to pick
it up.”
Barnett continued on this point: “The more mature tokenisation becomes, the benefits become apparent on reduced fraud and increased approval rates. That's the holy grail to an online merchant, and if they can see a higher approval rate, then it's going to
get prioritised.”
Looking forward to the tokenised checkouts in 2025, both Barnett and von Bismarck were confident it would be a good year for adoption. Barnett stated he thinks the majority of online transactions will be tokenised in some form by the end of 2025.
In concluding, von Bismarck said: “I would argue that we've got the momentum, we went over certain hurdles this year, where it really took on much more speed and adoption.”