American Express is the first company to adopt Google technology that supports virtual cards with minimal input from users when making purchases – eliminating the need to type a three-digit security code from the back of a plastic card at checkout.
While many websites let users store payment card details for later checkout, they still require users to provide a three- or four-digit security code printed on a plastic card as an additional measure of authentication. According to Google and Amex, this step is no longer necessary for advances in security technology.
“The security code is the last thing you still have to enter manually. It’s a small friction that virtual cards can solve,” said Lisa Yokoyama, product head of Amex Digital Labs.
Google has launched virtual cards on Chrome and Android, as part of a broader restructuring of Google’s payments technology. Google is storing user credentials in Google Wallet, while Google Pay will be used to make payments. Google is taking steps to declutter the Google Pay experience, including tokenized virtual cards within Google Pay. Users will have the option to make their enrolled Google Pay card virtual, eliminating the need to re-enter the card’s security code for in-app purchases.
Amex is responding to the rapid and ongoing expansion in online payments. According to Amex analysis, online retail sales are expected to reach $6.5 trillion in 2022, up from $3.5 trillion in 2019 and $1.3 trillion in 2014. There are also new online shopping categories such as home sales, office equipment and groceries that were long handled primarily offline.
“There are more people coming online than ever before, and we want to create new digital experiences for them,” Yokoyama said.
Consumers use Google to create and save virtual card numbers when using Autofill on Chrome and Android. Virtual card numbers replace the 15-digit physical card with a token, while automatically generating a dynamic four-digit card identification number, instead of the four displayed on the front of the user’s Amex card (Visa and MasterCard use three digits). do) the code printed on the back).
“There is an additional layer of security there because the token is not the actual number that is printed on the card,” Yokoyama said.
The virtual card can be managed on Google Pay’s site, where consumers enable the feature for the card, access the virtual card number and view recent transactions.
“Using a virtual card number helps reduce the physical card [reissuance] When fraud occurs because tokens can be locked without affecting the physical card number,” said David Schipper, strategic advisor for retail banking and payments at Aite-Novarica Group. “American Express is the first, but other card networks and browsers is likely to follow as it adds a lot of security to online transactions.”
Google reports that Visa, MasterCard and Capital One will also deploy virtual card technology for Chrome this summer. Visa, Mastercard and Capital One did not return requests for comment by deadline. A Google spokesperson said that as people shop online, “it is important to keep payment information safe and secure.”
According to Vijay Sondhi, chief executive officer of payment processing technology company, NMI, as more transactions take place across multiple physical and online channels, there is increasing pressure on businesses to ensure consumers a quick, painless shopping experience.
“These emerging partnerships in the payments industry are connecting tech giants with traditional fintech players to create great experiences for both the merchant and the end consumer,” Sondhi said.
Sondhi said such partnerships will become more prevalent as businesses try to anticipate consumer expectations for various payment options such as tap-to-pay, mobile wallets and biometric authentication.
“Virtual cards are a way to make it easier for consumers to transact where payment volumes can increase,” said Marco Salazar, Director of Payments, Javelin Strategy & Research. , which uses the Wallet app to store credentials for Apple Pay.
Apple also plans to support consumer payments between contactless cards and Apple’s hardware, but does not plan to process payments directly. Apple stores user credentials in a digital wallet for use on Apple Pay, supporting the same type of credential storage and separation of payment technology that Google is building through its restructuring.
According to Daniel Keys, an analyst at Javelin’s payments practice, virtual cards make Google a more active participant in consumer payments.
“There’s often an arms race with Google and Apple to make sure both are offering similar capabilities,” Keys said.