Network tokens: How automakers can simplify payment integrations and offer an improved in-car payment experience for drivers

Network tokens work like an alternative to a payment card but offer numerous benefits to merchants and users, including a simpler payment process, greater security and convenience. Parkopedia Product Manager - Electronic Payments, Ian Auty, explains how network tokenisation works and how Parkopedia’s Payment Platform uses this functionality to enable automakers to offer seamless in-car transactions without the burden of managing payment orchestration across numerous domains and merchants.

Securely managing payment processes can be a complicated and time-consuming process for businesses. However, network tokenisation can address this directly, working as a ‘pseudo-card replacement’ by converting credit or debit card information into a non-tangible token that can be used at a later date. Network tokens have a multitude of benefits, enabling higher authorisation rates for digital card payments that improve the customer experience and potentially increase associated spend for companies - but additionally, and most crucially, they also allow for greater fraud protection, providing benefits for the entire ecosystem, from merchants to end users.

Network tokens are issued by card providers - typically banks - and can be used to facilitate transactions, with only the company that created the token from the card details being able to initiate payment processing. Utilising network tokenisation enables payments to be orchestrated across multiple merchants and Payment Service Provider (PSP) setups and integrates seamlessly with Parkopedia’s existing in-car Payment Platform. This means that network tokenisation can deliver additional security and usability benefits while utilising existing services, so drivers in this case would gain the benefits of using network tokens, without having to change how they use in-car commerce.  

Network Tokens Vs Card Tokens

Network tokens offer advantages over card tokens since payment gateway card tokenisation generates tokens that are not reusable or transferable, with new tokens needed for each merchant or gateway. Tokens are also bound to the customer and not the card they were generated from, meaning they do not expire when the customer’s card expires or if it is reported lost or stolen. Further benefits come in the form of lower processing costs for network tokens, easier compliance for merchants and significantly higher approval rates than for card payments. Meanwhile, network tokenisation allows tokens to be used across the whole payment ecosystem - from the initiation of a transaction to the issuing bank. This significantly reduces the value of information if it is ever stolen or compromised, giving users greater protection and reducing the likelihood of having to dedicate company resources to investigating fraud cases. 

Fraud protection is increased further by having end-to-end encrypted payment credentials that contribute towards a frictionless payment experience for drivers with fewer two-factor authentication challenges. This minimises distractions behind the wheel, removing the need to pull out a phone for approvals as we look to eradicate phone usage behind the wheel, even for payment approvals. This setup also enables driver payment details to be updated in real-time. As a result, account detail changes can be automatically reflected in corresponding tokens, which reduces the likelihood of a ‘false decline’ due to an expired card. 

As network tokens are less sensitive than card numbers, it is easier for companies to share these safely, when needed, too. An example of this is how automakers may need to share network tokens with Parkopedia and other merchants when providing in-car services. This format enables the provision of ever more seamless user experiences for drivers with our focus on vehicle-centric services, covering everything from paying for parking, fuelling, and EV charging to toll payments from behind the wheel. 

Crucially though, network tokenisation does this while ensuring the highest-security levels.  Card tokenisation simplifies the process of handling raw card numbers (known as Primary Account Numbers (PANs)) plus the corresponding payment data. This ensures that payments are also PCI DSS-Compliant, meeting the high-security standards imposed by the EMVCo - the payment industry standards body.

The Growing demand for In-car Commerce

As in-car payments are still fairly new for many automakers, service providers and even e-commerce operators, many of these organisations are still establishing best practices in their areas. Consequently, there is little consistency within the current processes and there is a resultant risk of payment data being compromised. The need for vehicle-centric services - including parking, EV charging, fuelling and tolls - to work globally, could also easily mean automakers having to deal with hundreds of separate third-party merchants. 

As a result, safely managing highly sensitive payment data is a huge challenge, with most OEMs not yet equipped to manage this scale of fragmentation and complexity outside of their core business. With the global in-car commerce industry worth around $5 billion in 2021 and various estimates predicting that this will rise to more than $25 billion by the end of the decade, supporting network tokens will be essential for automakers and e-commerce companies to provide simple and secure in-car payments.

Demand for in-car payments is growing rapidly with the ability to pay for tolls through a car being deemed more valuable than audio streaming in the recent TechInsights global survey of 4,990 drivers. Meanwhile, being able to pay for parking, fuel and food is much more in demand by drivers than being able to read and update social media and play games through the car - despite social media and gaming functions featuring on an increasing number of vehicles. 

Parkopedia’s in-car Payment Platform aggregates numerous merchants for each vehicle-centric service, across multiple countries, while enabling seamless and secure transactions by integrating merchants’ preferred Payment Service Providers (PSPs), Payment Gateways and Acquirers, into one Single-Sign-On (SSO) account - on a global scale.

With the platform, third-party merchants are not required to set up merchant accounts with OEM PSPs, which saves time and inconvenience around individual management. Furthermore, it is simple to combine internal merchants (for OEM services such as Feature on Demand) with external service providers (such as fuel stations or parking operators), combined in one user experience for the OEM and their drivers.

With data security becoming ever more important and the demand for in-car commerce growing rapidly, network tokens are expected to become central to many automaker processes moving forwards - by enabling them to maintain payment details without the burden of managing payment orchestration across countless merchants and domains. Parkopedia’s Payment Platform brings together the majority of processes involved in managing payments while providing a seamless driver experience that compliments every journey and brings together numerous in-car connected features through one consistent and secure interface. Visit our dedicated product page to find out more or to discuss further with the team.