This post was originally published on Finextra (Security)
Credit card tokenization has evolved over time. Tokenization has made credit cards safer and more efficient for merchants, consumers and banks alike. In this article, I explain the different types of tokenizations.
What is tokenization ?
The physical credit card has certain information that is consider a sensitive information. For example the card number, expirty and CVV. Since cards are generally in your physical posession, they are safe. But it is no uncommon for your physical cards be stolen or lost. In such cases, you have to order a new card and cancel the old card. This can cost some non-trivial amount of money for the bank to print a new card and then mail it to you.
But the moment you receive the new card, all the subscription payments you had setup start failing. You have to then go and update the card details everywhere. Meanwhile merchants lose revenue because of the failed payments.
Just like physical cards, the online card records can also be stolen. For example if a merchant’s database of customer credit cards gets leaked, all those customers might have to cancel their cards and order new ones.
With explosive growth in ecommerce over the years
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