As digital commerce keeps growing, protecting payment data has become a core business priority. Recent breaches show how risky it can be to store sensitive card details in plain form. The challenge is keeping that data safe without making payments harder for customers—and for many businesses, payment tokenisation is the answer.
Payment tokenisation is a security process that swaps out sensitive card details, such as the primary account number (PAN) from a credit or debit card, with a unique identifier called a token. This token is randomly generated and holds no real value outside the payment system, so it’s useless if intercepted.
When you process a transaction using a token instead of the actual card number, the real payment data never passes through your systems or gets stored there. Even if a breach occurs, attackers can’t turn the token back into the original card details. This approach protects customers, lowers fraud risk, and helps merchants stay PCI DSS compliant.
Tokenisation in payments follows a structured sequence designed to safeguard customer payment information while keeping the payment experience smooth. Here’s how it typically works:
With the tokenisation process, merchants never have to store or transmit sensitive payment information. This significantly reduces PCI DSS compliance scope.
Tokenisation replaces real card numbers with random tokens that can’t be used outside the secure payment system. So even if a token is stolen, it’s useless to attackers. This applies to card, mobile wallet, and contactless payments.
Since stolen tokens can’t be linked back to card data, fraud attempts are less likely to succeed. This can also reduce chargebacks and disputes.
Merchants don’t have to store or transmit actual card data, which reduces the scope and cost of PCI DSS compliance. Tokenisation also supports compliance with privacy rules like GDPR.
Tokens make it possible to offer one-click checkouts, subscriptions, and auto-renewals without exposing sensitive details.
If a merchant’s system is compromised, only tokens are exposed and not real payment details. This helps limit the damage.
Tokenisation works across online, in-store, and mobile channels, and can be adapted for emerging methods like digital wallets and contactless payments.
These types are based on who issues the token and where it can be used:
|
Type |
Issued By |
Works Where |
Key Features |
Example |
|
Gateway / PSP Tokenisation |
Payment gateway or PSP |
Only within the PSP’s system |
Tokens stored by the PSP; ideal for recurring billing & one-click checkout, but not portable to another PSP |
Merchant using Antom to store card-on-file tokens for subscriptions |
|
Network Tokenisation |
Card networks (Visa, Mastercard, Amex) in partnership with issuing banks |
Across merchants and channels accepting that network’s token |
Automatic card updates (expiry, reissue), supports omnichannel commerce |
Visa Token Service replacing a card number for multiple online retailers |
|
Device Tokenisation |
Mobile wallet providers (Apple Pay, Google Pay, Samsung Pay) |
Token tied to a specific device (sometimes also a specific merchant) |
Each device gets its own token for the same card; adds device-level security |
Apple Pay assigning different tokens for your iPhone and Apple Watch |
|
Universal Tokenisation |
Industry initiatives / multi-network systems |
Across PSPs, card networks, and channels |
Designed for portability and interoperability; reduces need for re-tokenisation |
A single token usable for in-store, online, and in-app payments across networks |
These describe how and where the original card data is kept:
|
Storage Model |
How It Works |
Pros |
Cons |
|
Vault-Based |
Original card data stored in a secure “vault” and mapped to tokens |
Well-established, widely used, easy to audit |
Creates a single point of failure if vault is breached |
|
Vaultless |
No single database; token mapping is done algorithmically and distributed across secure systems |
Removes central storage risk; can be faster |
More complex to implement; less common |
Practical use cases across industries
Online stores, streaming platforms, and other subscription businesses use tokenisation to keep stored payment details safe. It powers one-click checkouts and recurring billing while reducing failed payments when cards expire or get replaced.
In physical stores, tokenisation works with mobile wallets like Apple Pay and Google Pay to make contactless payments quick and secure. It also helps link purchases to loyalty programmes without storing sensitive card data.
Marketplaces handle payments for many sellers. Tokenisation lets them process transactions securely and split funds without storing card numbers, keeping them compliant and reducing fraud risk.
For businesses that bill other businesses, tokenisation makes recurring payments and invoice settlements secure and simple. It saves time, cuts admin work, and keeps client payment data safe.
|
Tokenisation |
Encryption |
|
|
Method |
Replace with unique token |
Scramble using cryptographic algorithm |
|
Original data storage |
Stored securely by token provider |
May still be present in encrypted form |
|
PCI DSS impact |
Reduces scope significantly |
Still within PCI DSS scope |
|
Typical use |
Card tokenisation in payments |
Securing data at rest or in transit |
Integrating tokenisation doesn’t remove your compliance responsibilities. Businesses still need to work with providers that follow recognised tokenisation standards and meet PCI DSS requirements. This includes ensuring tokens are generated, stored, and transmitted securely, and that the original card data is held in a PCI-compliant environment.
Merchants should also consider how tokenisation aligns with other data protection rules, such as GDPR or local privacy laws, especially when operating across borders. Additionally, evaluate how your provider handles token lifecycle management—such as updating tokens when cards expire—and whether they support audits and reporting to demonstrate compliance.
The simplest way to adopt tokenisation is to choose a payment gateway or processor that offers it as a built-in feature. This allows tokens to be created and managed automatically as part of the standard checkout flow, without extra development work.
If your business has more complex checkout journeys—such as multi-vendor marketplaces, subscription billing with custom schedules, or omnichannel experiences—API-based tokenisation can give you more flexibility. With the right APIs, you can tokenise card data at specific points in the customer journey, integrate with other internal systems, and manage tokens across channels or business units.
Simple on-page messages or help centre articles explaining that their card data is never stored in its original form—and is replaced by a secure, unusable token—can reassure customers and reduce checkout hesitations. This is especially valuable for recurring or high-value transactions.
Antom integrates payment tokenisation into both online and in-store transactions, helping merchants protect sensitive card data without adding friction at checkout. Whether it’s merchant tokens that enable secure recurring billing or device-specific tokens used in mobile wallets like Apple Pay and Google Pay, every transaction is processed with safeguards that keep real card details out of reach from fraudsters—while keeping the payment experience fast and seamless.