Michael Seaman, Co-founder and CEO of Swipesum, is at the forefront of transforming payment processing and merchant services. Founded in 2016 with his brother, Stephen, Swipesum leverages AI and proprietary software to create transparent, optimised payment strategies for businesses nationwide. Recognised by the Inc. 5000 for its remarkable growth, the company is reshaping the payments landscape. In this interview, Michael shares insights into the evolving world of payment solutions, Swipesum’s journey and the vision driving its success.
What are card-not-present (CNP) transactions, and why have they seen a significant rise in recent years?
As online ordering and e-commerce transactions increase, other brick-and-mortar businesses encourage their customers to switch to CNP transactions. Convenience is a large determining factor pushing consumers to use their apps and order ahead, which inevitably is growing this trend. Retail, QSR and even convenience stores continually push their customers to switch to CNP payment methods. In today’s digital landscape, it’s no surprise that this trend is growing in popularity.
How do network tokens work, and how are they different from traditional payment card details in terms of security and functionality?
Network tokens are digital identifiers used in payment systems to represent a credit or debit card number in a secure and tokenised form. Each network token is dynamic, meaning it can include transaction-specific data, such as merchant details, making unauthorised reuse virtually impossible. Tokens completely replace sensitive card details with a unique, encrypted identifier, decreasing the risk of fraud and identity theft. Tokens also allow for real-time updates. If a card is lost, stolen or replaced, the token is updated with this information in real time, ensuring uninterrupted transactions without the need for manual updates by the customers.
Unlike traditional card details that are static and vulnerable, if stolen, these unique identifiers are specific to the transaction or merchant and greatly reduce exposure to data breaches. Network tokens also have a limited use. They can be restricted to a specific environment or merchant, whether that be an in-app, online or in-store transaction, the token will not be effective outside of its designated circumstances. Lastly, network tokens improve functionality. When using tokens, merchants often have higher authorisation and approval rates, reduced interchange costs and transaction failures. Because network tokens are equipped with automatic updates, this prevents declined transactions due to expired or replaced cards.
What are the benefits of using network tokens for businesses and consumers in the context of CNP transactions?
Consumers will not necessarily be aware of the shift towards network tokens. However, large and forward-thinking card-not-present businesses that are already pressing for network tokens to be available in their payment environments will increase revenues and reduce fraud, becoming game-changers in their industries.
What challenges or limitations do network tokens face in widespread adoption, and how are payment networks addressing these issues?
While network tokens are not an entirely new concept, getting them to go live in a normal payment processing environment requires a lot of manual labour, including paperwork and engineering from payment companies. In my opinion, this is the largest hurdle businesses face in adopting network tokens – the implementation. The companies that make this a priority, however, will easily have merchant adoption and reap the benefits that come from utilising network tokens.
How do network tokens contribute to reducing fraud and improving the success rate of CNP transactions in e-commerce and digital payments?
It all comes down to the issuer’s trust in the tokenisation process. E-commerce businesses will benefit from a lower fraud risk and are more likely to approve transactions they perceive as low-risk. Tokenised transactions have a significantly lower fraud profile due to access to up-to-date information. As I mentioned before, network tokens can be tied to specific merchants, channels or environments, making them virtually useless during fraud attempts. This gives issuers greater confidence in the legitimacy of their merchant or customer transactions.