Why tokenize payments?

Blockchain has been a huge revolution, since it eliminates intermediaries in transactions and decentralizes management.

This chain is made up of blocks (tokens) linked together and encrypted, making the security of the data they house much higher. Thanks to this, it is the user who controls the process and not third parties such as banks or other intermediaries.

To put it simply: when a consumer wants to make a transaction with their card and uses a tokenized payment system, the system encrypts the information on the card, confirms it and sends it to the seller. This information is encrypted thanks to the blockchain system that is continuously storing information and encrypting it over and over again to prevent intrusion.

Thus, “tokenization” is now synonymous with ease, trust and security, since it is one of the best data protection strategies that can be integrated into the different payment ecosystems. The benefits it brings to sellers and consumers have enabled it to spread so quickly.

In the midst of an increasingly varied panorama of online payment methods, the greatest advantage offered by tokenization to customers is the quick and easy connection of their payment card with the digital payment services that they use periodically, managing and protecting your personal data when paying in physical stores or electronic stores. Meanwhile, for sellers, the main benefit is to provide their customers with a considerably better payment experience by increasing confidence and security rates.

An important element of the token concept is that, outside of the specific financial relationship for which they were created, they are totally worthless. And it is precisely that characteristic of tokens, representing (replacing) a specific value in a certain relationship, the basis of the tokenization process in payments. A process that reduces the number of systems that have access to cardholder information, thereby increasing the security of data protection.

Tokenización de pagos


With tokenization the primary account number (PAN) is protected under an algorithmic encryption system that issues a unique numerical code made up of similar digits (the token) that replaces the PAN during the transaction. If a customer makes a purchase using a tokenized payment service, the information sent to the payment card network is a token instead of the account details of the owner. This is a very safe way that, in the data flows generated in a transaction, no information of the holder is duplicated. Tokenization is therefore intended to ensure customer privacy, which is only exposed to the service provider and the bank, and not to the seller.

The tokenization operation is simple and saving distances we can summarize it in three phases:

  1. Provisioning: the customer is provided (or already owns it) with a token linked to their PAN;
  2. Validation: in a payment process the token is sent to the credit card network to process the transaction. This network “detokenizes” the token, obtains the PAN that it sends to the bank of the card owner and receives a validation from that financial entity.
  3. Authorization: once the transaction has been validated, the network “retooks” the PAN and sends the authorization to the seller.

This whole process is done in seconds and is fully compatible with existing payment environments.

Advantages of payment tokenization.

For e-commerce that accepts card payments, tokenization allows them to store their customers’ card data and reduce, for example, the requirements to comply with the PCI DSS.

Another of the main advantages that tokenization brings to payments is the improvement of the payment infrastructure itself. A customer who has previously linked their data to a token can pay faster anywhere and thus considerably increase the transaction volumes that a business can process.

Múltiples tokens para una misma tarjeta

The fact that multiple tokens can be created for the same card makes it possible to flexibly control and manage the specific channels in which a token can be used.

If a token is configured only for a paid service in a specific mobile application (or a specific website), it cannot be used in another digital environment if it is stolen. This advantage limits data leakage due to the possibility of an external third party accessing the token. Even if an external third party accesses the token, since the encrypted information held by the token only has value in a certain relationship, it is useless information for that external person. If this unwanted access occurs, simply replace the token by quickly deactivating the previous one. In no case does the client have to replace the credit card.


  • Eliminate duplication of customer data information in each payment environment.
  • The tokens are not reversible so it becomes useless information for a third party to access them.
  • Convenience and immediacy in transactions.
  • By storing tokens and not sensitive card information, sellers are in a better position to raise their data protection standards.
  • By limiting the number of systems that access payment card information, it reduces the scope of PCI DSS compliance and makes it easier to obtain certification with fewer requirements.
  • It is not necessary to implement controls associated with confidential data, because the token is not considered confidential data.
  • It facilitates the presence of more electronic businesses with better security standards, all operating with some of the tokenization platforms that exist.

In short, tokenization manages to increase security in purchases. This is something that still scares many consumers who have qualms about giving their bank details at the end of a purchase. Therefore, this system increases safety for both consumers and businesses.