Tokenisation

What is tokenisation and how does it work?

Tokenisation is a data security process that replaces sensitive information, such as card details, with unique identification symbols called tokens. Tokens hold no exploitable value and can be safely stored by an organisation, reducing the risk of data breaches. Customers also benefit, as they no longer need to re-enter their card details for future payments.

What is an example of tokenisation?

When a customer saves their card details during an online checkout or over the phone, the actual card number is replaced with a token — a unique symbol with no exploitable value. For example, a card number like 1234 5678 8765 4321 might become H42YU2QQ98A. The next time the customer makes a purchase, they simply select their saved card and the token is used instead, saving time and protecting their data.

Is tokenisation the same as an NFT?

No. Tokenisation in payments refers to replacing sensitive data with a secure token for processing and storage. NFTs (Non-Fungible Tokens) are a different concept entirely — they are digital assets that represent ownership or proof of authenticity of a unique item, such as artwork or collectibles, on a blockchain network.

What is the difference between crypto and tokenisation?

Cryptocurrencies are digital currencies that use encryption to secure transactions and operate independently of central banks. Tokenisation, by contrast, is the process of replacing sensitive data with a secure digital token — it is a security mechanism, not a currency.

How many types of tokenisation are there?

There are two main types used in the payment industry:

• Card-based tokenisation — replaces sensitive card data (such as the card number and expiry date) with a unique token, which is then used for payment processing while the original data is stored securely by the payment processor.
• Network-based tokenisation — generates and manages the token at the payment network level rather than the card level. This is typically used for mobile payments, where the token is stored on the device.

How do I tokenise my card?

You cannot tokenise your card yourself. The process is handled by the card issuer or payment network, usually when you opt to save your card details with a business or payment provider.

Are digital wallets tokenised?

Digital wallets are not tokenised themselves, but they can store and manage tokens. They act as a secure system for holding various token types — such as payment tokens or cryptocurrencies — allowing users to send, receive, and manage their digital assets from one place.

What is the biggest advantage of tokenisation?

The primary benefit is significantly reduced risk in the event of a data breach. Because actual card data is replaced with tokens, hackers cannot access sensitive customer information even if they gain entry to a system. Beyond security, tokenisation also enables a faster checkout experience for repeat purchases, reduces abandoned sales and failed payments, and makes it easier to offer payment plans for high-value transactions.