What is tokenisation?

Tokenisation is a simple, yet powerful concept pioneered by Visa: conceal sensitive payment data on its journey from the merchant to the consumer’s bank, making digital payments more secure and helping businesses to grow.

Tokenisation replaces the 16-digit number found on a credit or debit card (PAN) with a digital token – a completely unique string of numbers with no meaningful data. When a payment is tokenised, consumers’ underlying account details are obscured, meaning their payment data is unreadable and unusable by anyone else, for any other transaction other than the one they authorised.

Benefits of tokenisation: Simple, seamless, and secure

When a merchant enables tokenisation within their online platforms or apps, instead of storing a customer’s sensitive card details, they replace them with a token that can only be used with that merchant, for their products or services. This can reduce the risk of fraud by up to 50%¹, because if a token is stolen, it can’t be used by fraudsters.

What’s more Visa helps the merchant maintain the token, so it’s usable even if the underlying data changes – for example if a customer’s card has been replaced, they can continue to pay without having to update their payment information manually. This makes the whole experience more seamless for the customer and can increase authorisation rates for businesses by up to 5 percentage points².

Read how tokenisation is helping Bolt have greater business efficiency alongside the confidence of knowing they are providing a safe and seamless payment experience to their customers.

Tokens, tokens, more tokens

A token is seen as a high-quality credential – it’s difficult to be used fraudulently and can be inserted in any payment experience, stripping out the friction in most transactions today. The more tokens that exist, the bigger the pool of high-quality credentials there are to transact with. The knock-on effect is a stronger network, higher trust among consumers who can enjoy a more seamless and secure way to pay, and increased revenue for businesses who can benefit from better user experiences, lower transaction costs, reduced fraud, and increased authorisation rates.

How will tokenisation shape the future of payments?

Tokenisation is a powerful tool for facilitating experiences of the future. As world renowned futurist, Matthew Griffin says, “you can tokenise anything”, highlighting the potential to move from transacting in money to transacting in value. Imagine a world in which any device with a digital heartbeat could be used to initiate or accept payments securely.

Griffin asks, “are we looking at the future of money or the future of value?” In a token economy, digital tokens act as a transferable item, representing real-life value such as loyalty points, discounts or rewards. An example of tokenising value could be a brand creating discounts based on how active their customers are – rewarding them with points to spend in store.

Tokenisation has limitless potential to unlock opportunities for richer, more personalised experiences, that reduce friction for consumers and help businesses to grow.