Guides and reports

Tokenization: Guide to card and payment tokenization

Discover how card tokenization can reduce fraud and streamline your payment processing.

8 September, 2023
 ·  7 minutes
Credit card with Adyen's encrypted data transfer illustration.

Tokenization is the process of replacing sensitive data with non-sensitive data. For payments, this means safeguarding a card’s PAN by replacing it with a unique, non-identifiable number.

How does tokenization work

A payment token is a unique string of numbers, which acts as a secure identifier, generated from the card PAN. Payment tokens are issued in real-time and are used online in specific domains and/or payment environments, i.e only ecommerce, only for specific merchant(s) etc.

Tokenized payments are payments where the PAN is substituted by a token while processing the transaction. This means the PAN is not transmitted during the transaction, making the payment much more secure. Since the PAN is never compromised, it's almost impossible for the token can be used fraudulently. Even if a data breach occurs and payment tokens are accessed, the tokens cannot be used elsewhere.

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