What is payment card tokenization?

Card tokenization involves converting a payment card number into a token - a string of characters with no value outside of a specific payment system. The customer enters their card details into the operator's form; the operator stores it on its side, and the store receives only the token. The store then uses this token to authorize subsequent charges.

In an online store, tokenization enables two things: one-click payments for subsequent purchases and recurring payments for subscriptions. The secure storage where the payment processor keeps card data is sometimes called a Vault.

The most important benefit for the store is that it does not store card numbers in its own database. A token leak does not grant access to the card, and the store does not assume responsibility for storing the most sensitive payment data. When choosing a payment processor, it's worth checking how its tokens behave when a bank issues a new card to a customer.