What is network tokenization?

What is network tokenization?

Network tokenization is a payment security approach provided by networks like Mastercard, Visa, American Express, Maestro, Rupay, Union Pay, Discover, etc. It replaces sensitive card data like primary account numbers (PANs) with unique tokens to enhance security during transactions.

The card brands generate these tokens and constantly update them. Even if a physical debit or credit card is locked due to suspected fraud, the network token ensures that the user's payment credentials remain up to date in real time. As a result, customers encounter fewer instances where transactions are declined due to outdated information. This supports user satisfaction during recurring transactions. Merchants get increased security, reduced declines, cost savings, and improved checkout experiences.

Unlike PCI tokenization, which replaces PANs at specific points, network tokenization affects the entire payment process. Network tokens are domain-specific and tied to a single device, merchant, channel, or transaction type. This means they are limited to specific devices, merchants, channels, or types of transactions.