Visa's growth beyond plastic cards relies heavily on tokenization, a strategy that should get a major boost from its planned acquisition of CardinalCommerce.
The card network announced the deal Thursday. Financial terms were not disclosed, and the transaction is expected to close in early 2017. Visa could not immediately be reached for comment.
Cardinal, an e-commerce payment authentication company, will be put to work on a variety of security projects at Visa, one of the most important being the network's plan to integrate tokens, or numerical substitutes for account numbers, into Visa Checkout over the next 18 months. Visa Checkout is an e-commerce payment system that consumers enable through their banks, and the network has been recently working to make enrollment easier.
As mobile technology joins merchants' payment options for omnichannel sales, tokenization is considered a necessary element in security. As part of the token migration for Visa Checkout, the addition of Cardinal will allow more seamless integration of 3-D Secure and other fraud mitigation capabilities, Visa said in a Dec. 1 press release.
Visa already provides Cardinal's services to merchants and acquirers through the network's merchant platform, CyberSource. Merchants are challenged to balance user experience with tougher authentication standards, and Visa hopes to addition of Cardinal, along with other efforts to streamline risk for merchants and issuers, will make a mix of online and brick and mortar payments more attractive to retailers.
"By helping merchants, acquirers, and issuers better distinguish between good and bad transactions, Visa is in an even better position to streamline consumer trust in digital payments," said Mark Nelsen, senior vice president of risk and authentication products at Visa, in the press release.