Tokenization Explained: What it Is, How it Works and How You Can Benefit

Categories : Digital Money and payments, Technology and Operational Enablers



Tokenization can be defined as the replacement of a high-value credential with a surrogate number that can only be used within a particular context. Since this definition is quite broad, the word ‘token’ can mean many things to many people. In the context of this whitepaper, the high-value credential is the PAN. Even within this context, it is necessary to properly distinguish between two types of tokens: security tokens and payment tokens. The key difference between these token types is that payment token can be used to initiate a payment transaction, whereas security token cannot.