How does tokenization make online payments more secure?

How does tokenization make online payments more secure?

Here's how tokenization makes online payments more secure compared to using your credit card directly:

Data Exposure:

Credit Card: There's a risk that the number, expiration date, and CVV can be exposed to the merchant. This data can be stored insecurely and intercepted during transmission, leading to potential breaches.

Tokenization: It replaces sensitive card data with a random token, and the actual card information is not transmitted or stored, significantly reducing the risk of data exposure.


Credit Card: A credit card number follows a predictable pattern based on the card issuer. Attackers can exploit this predictability and can guess the card numbers.

Tokenization: Tokens are random and have no inherent pattern, which makes it extremely difficult for attackers to guess or reverse-engineer the original data from the token.

Dynamic Tokens:

Credit Card: Unauthorized users can misuse card data for payment transactions because authorization is not required.

Tokenization: Dynamic tokens are valid only for specific transactions or within limited time frames. This prevents unauthorized reuse of intercepted tokens.

Centralized Security:

Credit Card: When merchants manage credit card data directly, it can lead to varying levels of protection that are not up to regulatory standards.

Tokenization: Payment processors or dedicated tokenization services offer centralized security expertise, potentially offering higher levels of protection.


Credit Card: Merchants cannot comply with strict PCI DSS compliance standards when storing actual credit card data

Tokenization: Since actual cardholder data is not stored, it meets the requirements of all compliances.