Not One or the Other, But Both: Using Account Updater and Network Tokenization to Optimize Payments Performance


Katie McCarthy


September 28, 2023

September 28, 2023

September 28, 2023

If you work in payments, then you know one of the biggest topics in the industry these days is improving acceptance rates. There are lots of things to try, including designing a thoughtful and adaptive checkout experience, utilizing processing flags, and offering a variety of payment methods. Fortunately, we have two proven ways to increase acceptance: the card brand programs of account updater and network tokenization. By utilizing these services, businesses of all sizes can combat key addressable declines like expired_card, invalid_transaction, account_closed, and more, and help keep transactions processing as usual. 

When most businesses consider utilizing these programs, they compare and contrast them against one another in order to choose the one that best fits their use case. This is a fine approach, as both account updater and network tokenization have individual merits. That being said, what you may not have considered is that when employed together, account updater and network tokenization can be powerful complements in increasing payments acceptance. 

Let’s explore the two network programs, what their benefits are, and how Pagos can support you in using both as a part of your payments optimization strategy.

How does Account Updater Help Increase Acceptance?

Account updater (AU) is a network-facilitated issuer service that allows ecommerce merchants to access updated customer card credentials without interacting with customers themselves. If a customer’s card expires or has been submitted for lost/stolen renewal and their issuing bank issues the customer a new card—which happens to roughly 33% of cards each year—AU allows a merchant to request the new card’s credentials. Participating issuers will then send those credentials via the networks. This is particularly helpful for subscription and recurring billing merchants or merchants who store cards-on-file, as they can update customer credentials without disruption to the payment experience, thus minimizing involuntary churn. By utilizing AU, you increase acceptance purely because you stop attempting transactions with outdated card credentials that will inevitably fail!

The Technology Behind Account Updater

So how does this work exactly? The most used and established form of AU is a batch system, whereby the merchant sends the cards they want updated via a batch file to the card brand, and the brand responds in turn with a batch file of updated responses.The batch format requires some foresight to both identify the cards that will need updating and send off those cards for updates before running more transactions for the associated customers. Typically, you’ll want to identify all cards set to expire within the next month and/or those attached to your most loyal customers, and batch them together for regular updates. 

Loon: Pagos’ Account Updater Service

There used to be only two ways you can connect to the card brands for account updater services:

  1. Via your processor (this requires multiple connections if you have processor redundancy in your payments stack)

  2. By integrating directly to the networks

Pagos provides a third and significantly enhanced option: Loon.

Pagos’s global account updater solution, Loon, already has direct access to the four major networks (Visa, Mastercard, AMEX, and Discover). That means that you can access the benefits of connecting directly to a network without any of the technological and relationship complexity. Simply integrate with Pagos once, and you can get AU up and running in no time in all markets where your business operates—completely independent from your processors. And unlike a direct-to-network connection you managed on your own, you’ll never face costs associated with supporting ongoing network changes; Pagos will take care of everything for you. 

Loon also offers cost-saving benefits that processor account updater integrations can’t match. For example, if you use multiple processors and integrate with AU through each one, you may find yourself paying for the same card update multiple times—once for each provider. Pagos helps you avoid that by centralizing updates and connecting you to the networks directly. Additionally, Loon allows you to pick and choose which cards you send for updates, instead of requiring you to send all of them—even those associated with inactive customers—as most processors often do. This means only paying for the updates you actually want. Learn more about Loon in our Product Documentation.

How does Network Tokenization Help Increase Acceptance?

Network tokenization (NT) is a network-facilitated issuer program that allows ecommerce merchants to tokenize Primary Account Numbers (PANs) of their customers. Turning PANs into network tokens automatically increases security through the entire payments system; each token is unique to both you and your customers and cannot be successfully used outside of your payment environment. As such, NT significantly reduces the risk of fraud on your stack and decreases fraud-related decline rates. Similarly, network tokens can help you avoid lifecycle-related declines and increase issuer approval rates by around 2-7%. Because they’re issued before a single transaction occurs, these tokens contain more information about the merchant-customer relationship; with more data and context, issuers are more included to authorize transactions.

Side note: The power of network tokenization becomes more apparent when there are more participants in the program. To encourage participation, card brands provide interchange reduction for network tokens in countries like the US, Europe, and Australia. So with NT, you can increase acceptance, decrease fraud, and decrease costs. It’s a win-win-win!

The Technology Behind Network Tokenization

Tokenization of a customer’s card first happens when you add that card to your vault or ecommerce platform; you send the card you want tokenized to the card brand, and the brand returns (e.g. provisions) a network token. Alternatively, if you already have a large number of existing PANs stored on file, you can provision tokens for all those cards in a single batch, thereby leveraging network tokenization for existing customer relationships. 

To actually process a transaction with a network token however, you’ll need to fetch a cryptogram. Cryptograms are single-use, non-stored keys that must be sent with the network token for decryption by the card issuer. Only together can the transaction be accepted. As mentioned above, the cryptogram provides the issuer with more context on the authorization, this increasing approval rates.

To learn more about the technology behind Network Tokens—and how it’s different from PCI tokens—check out our Network Tokenization Basics blog post.

Toucan: Pagos’ Network Tokenization Solution

Like account updater, network tokenization enrollment used to only happens in two ways: 

  1. Via processors, which requires multiple connections if you have processor redundancy in your payments stack

  2. A direct integration with the networks, which requires a large up-front investment and ongoing maintenance costs

Once again, Pagos swoops in to change the game with Toucan, a global network tokenization service. Toucan has direct access to the four major networks (Visa, Mastercard, AMEX, and Discover). This means you can have immediate access to the benefits of network tokenization—including increased approval rates and lower cost—across all card brands through a single integration! Even more, Toucan is a global solution, meaning businesses operating in any market can provision cards issued anywhere globally, provided the card issuer participates in NT.

And that’s not all! Toucan offers additional benefits you’d never get through a direct-to-network or process-managed NT integration. For example, Pagos provides you with your own TRID for each major network, thereby ensuring better NT performance and approval rates. Additionally, instead of paying to provision a token multiple times for the same PAN—one for each processor—you request only one token to use across all your payment service providers (PSPs). Toucan also supports passing metadata and card art with network tokens, and stores the PAN associated with a token, in case you ever need it as a reference. Learn more about Toucan in our Product Documentation.

How Do Account Updater and Network Tokenization Complement Each Other? 

Both account updater and network tokenization have benefits on their own, so why does Pagos recommend using them as complements to each other? The answer lies in the fact that both services are issuer-participated programs. While the card brands facilitate the technology and the transfer of information—and encourage issuer participation through rules and incentives—the issuers must choose to participate; because issuers have technology roadmaps and resource limitations of their own, they’re not always able to enable these services.   

Account updater is a more established product and more issuers participate in this program relative to network tokenization. While account updater increases approval rates and can support better customer experiences, it doesn’t reap the same fraud and interchange benefits of network tokenization. But relying exclusively on network tokenization isn’t wise either—if you find out an issuer doesn’t participate in network tokenization, but your PAN credentials are expired, how do you manage to make the transaction? 

Today you should consider updating PAN credentials with account updater and using network tokens to address the needs of your customers. Using both NT and AU together ensures that before you even provision a PAN, it’s the most up-to-date card credential for the customer in question. Then, you have the flexibility to pick and choose when to use the PAN vs. the token. For example, if you’ve seen PAN credentials are more likely to be accepted in certain regions with certain card products, by all means use the PAN; if you’ve seen network tokens are more successful in other parts of your stack, use tokens there! 

Here at Pagos, we envision a future world where network tokenization reigns supreme. We base this assumption on the incredible power network tokens have in deflecting fraudulent activity—a benefit felt by merchants and customers alike. But until we reach that time, it’s always good to have the (updated) underlying PAN information, as well. That’s why we recommend using every tool—or in our case, bird—at your disposal to keep your business running smoothly.

Ready to get started?

If you’re looking to increase approval rates, decrease fraud, and even minimize costs of payments acceptance, you need to consider employing network tokenization, account updater, or—preferably—both. With Pagos Solutions, you can do just that in no time at all. Loon and Toucan provide you with access to direct-to-network global account updater and network tokenization functionality across all major card brands for each processor you transact through. What could be better? Contact us today for a demo!

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