The Connecting Thread: How PAR Values Can Mitigate Fraud and Supercharge Loyalty Programs

The PaymentsJournal Podcast

When customers make purchases using Apple Pay or Google Pay—or enter their card info at online checkout—their sensitive data is protected by replacing it with a token. While this safeguards consumer privacy, it has also created a challenge: because the same card can be tokenized differently across multiple merchants, businesses are losing access to vital customer insights that could drive smarter marketing, stronger loyalty programs, and better fraud prevention.

In a recent PaymentsJournal podcast, Andrew Sjogren, Director of Product Marketing at IXOPAY, and Don Apgar, Director of Merchant Payments at Javelin Strategy & Research, discussed a promising solution: using personal account reference (PAR) values as a consistent, secure link across transactions to help merchants reconnect with critical customer data and unlock new insights.

A Single Consistent Value

As the e-commerce space has evolved, a personal account number (PAN) from a single card can be tokenized countless times. That same card might also be tokenized in multiple formats, including network tokens, PSP tokens, and universal tokens. This has led to a more secure, yet increasingly fragmented, digital economy.

“As in so many times in payments, the solution becomes the problem,” Apgar said. “After so many data breaches, everybody rightfully invested in tokenization. Now that merchants are moving ahead with orchestration strategies to optimize other metrics and payments, competing token strategies mean merchants have lost track of the customer journey, because they’re no longer able to connect the dots and follow the breadcrumb trail from disassociated tokens.”

Despite these challenges, merchants have found workarounds to link transactions to customers. For example, the merchant might have a customer log into their website or enter their information at a point-of-sale device. A small coffee shop, for instance, might ask customers to enter their phone number at checkout to manage their participation in a rewards program.

Though these patches exist, they are manual workarounds that require customer participation and can often cause friction at checkout.

Tracking transactions using a PAR value could offer a universal solution requiring no manual intervention. PAR is a 29-character alphanumeric identifier associated with a single card account, developed by EMVCo several years ago.

“With so many different token formats, you lost sight of these tokens being associated with just a single card account,” Sjogren said. “All of a sudden EMVCo says, ‘We’re going to establish this PAR reference value, it’s going to be that common thread so no matter what token format or where it’s tokenized, you’re going to have a single consistent value linked to that card.’ That’s a transaction that you can operate on—without being afraid that it’ll come within PCI scope.”

Satisfying Compliance and Reducing Fraud

The fact that PAR satisfies merchants’ Payment Card Industry (PCI) obligations is a significant advantage, and the protocol could help mitigate many of the fraud and compliance challenges merchants face.

“From a compliance standpoint, it can descope your PCI, if you’re storing PAN anywhere for customer record keeping,” Sjogren said. “Maybe you’re passing on the PAN to a fraud services provider to associate with an account. PAR can just replace PCI-sensitive data in many cases where it is used outside the transaction, and you’re incurring no scope there.”

Beyond improving compliance, PAR can help merchants fight fraud more proactively by providing fraud prevention tools with deeper insights into potential threats through access to more data.

There are also specific types of fraud that PAR can address head on. For example, when merchants run promotions designed to attract new customers, existing customers often create additional accounts to take advantage of the offers. Sometimes, a single customer may create multiple accounts using different email addresses to repeatedly access discounts and promotions.

PAR can help mitigate this behavior by identifying each instance where a card account is used to create a customer account. It could also be leveraged to assess whether an account carries a higher risk of friendly fraud.

“You can say, ‘Wow, this account looks like a high risk for friendly fraud because we have a very high dispute rate here,’” Sjogren said. “If that persona gets flagged with a friendly fraud warning, even if they come back and add their Google Pay as opposed to their direct card in this new account, if it’s related to that underlying card account, you can quickly identify that account and take the correct measures to control the promotional abuse.”

PAR at the Ballpark

Beyond improving fraud prevention, PAR can also have a substantial impact on the customer experience.

This is possible because PAR can serve as the connecting thread across all transactions—whether the customer paid with Apple Pay or Google Pay, the merchant submitted the transaction as a network token or a universal token, or the card was tapped or swiped in person.

“My favorite metaphor is that baseball season is starting up,” Sjogren said. “Here in Boston, I’m getting our Fenway Park tickets and I’m taking my kid, who just turned 6, to his first baseball game. I buy tickets online and have those mailed to me; I walk into the park; I buy a few concessions as we’re heading to our seats. When we’re in our seats, I buy him his favorite Italian ice. Afterwards, we go and pick up a jersey at the shop, maybe a few other souvenirs.”

In the current paradigm, all these transactions occurring within a single environment would appear as separate, unrelated events, making it difficult for the ballpark to link them to a single buyer.

By utilizing a PAR value, the organization could gain insight into the customer’s preferences—from their favorite snacks to their favorite player—putting the ballpark in a much stronger position to engage the consumer through targeted loyalty and marketing programs.

“The ballpark example is interesting because, when you peel it back and get into all the different point-of-sale environments, types of transactions, reasons for the transactions, and the timing, it (reveals) a complex ecosystem,” Apgar said. “That’s a really good use case for a data technology like a PAR, to connect the dots of the customer journey.”

A Quality-of-Life Addition

The potency of the technology also increases as merchants scale. While PAR is specific to a single card account, it can create significant value for merchants who utilize multiple payment channels and various token formats.

Although PAR technology has been around for some time, it hasn’t gained as much traction as other tokens, largely due to the ubiquity of alternative formats and a general lack of merchant awareness. However, the benefits of PAR suggest that the protocol is likely to be thrust into the limelight soon.

“The reason that we pushed this on our roadmap was that, as an orchestrator sitting on top of an entire payment stack, we’re in a unique position to add value across the entire merchant payment ecosystem,” Sjogren said. “By offering it as an orchestrator, we can support the entire payments flow and make it standard across your vaulting and transacting.”

“PAR essentially can be a quality-of-life addition,” he said. “What PAR does is it steps in and it takes the busy work out, and it provides a leak-proof foundation so that you’re not seeing a lot of slippage in the tracking that you’re doing.”

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