Network tokenization

With network tokenization, a merchant’s processor asks the card network (Visa, Mastercard, American Express and others) for a token that stands in for the card number. The token is unique to the combination of card and merchant and is used instead of the number when charging.

The network keeps the token linked to the account behind the card. When the bank issues a new card because the old one expired or was lost, the token keeps working without any action from the customer or the merchant. Processors such as Adyen also report higher authorization rates for payments made with network tokens.

For recurring billing, this cuts failed renewals caused by reissued cards. It is usually handled by the processor, sometimes automatically, and complements an account updater rather than replacing it, since not every card or issuer supports tokens.