Glossary
Tokenization
Replacing sensitive payment credentials with a non-sensitive reference that can be stored and reused without exposing the original data.
A token is a substitute value that maps back to the real card or account details inside a secured vault. Merchant systems store and transmit the token, so the underlying credentials never touch their infrastructure — which materially reduces the scope of their card-data compliance obligations.
Tokens can be provider-specific or provider-agnostic. Provider-specific tokens are only usable with the processor that issued them, which creates switching costs. A provider-agnostic vault keeps stored credentials portable so routing decisions stay commercial rather than technical.
What it covers in practice
- Reduces the systems in scope for card-data compliance
- Enables card-on-file, recurring and one-click payments
- Provider-agnostic vaults prevent processor lock-in