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www.adyen.com
Many businesses are working towards making the checkout stage of the shopper journey as seamless as possible through
enabling options such as one-click payments. However, to do this, payment data – particularly the PAN (Primary Account
Number) – needs to be stored so it can be accessed for future transactions without the shopper having to re-enter card
information. And this presents a challenge: How to store this sensitive data in a secure way?
The answer to this lies in tokenization, a major industry technology that is shaping the way merchants accept payments and use
payment data across online and in-store.
How tokenization technology works
Tokenization is a process of replacing sensitive data with
non-sensitive data. In the payments industry, it is used to
safeguard a card’s PAN by replacing it with a unique string of
numbers.
The payment token itself is the unique string of numbers – a
secure identifier generated from a PAN. Payment tokens are
automatically issued in real time and used online in predefined
domains and/or payment environments. Examples include:
only e-commerce, only for a specific merchant(s) and so on.
Tokenization
Payment technology guide
Therefore, tokenized payments are payments in which the
PAN is substituted by a token while performing a payment
transaction. With tokenized payments, the PAN is not
transmitted during the transaction, making the payment more
secure. This is the key strength of tokenization as a security
measure. Since the PAN is never compromised, there is very
little possibility that the token can be used for fraudulent
activity – even if a data breach occurs and payment tokens are
accessed.
www.adyen.com
The tokenization payment flow
Adyen’s tokenization service securely stores customer card
data and generates a token that can be used by the merchant
to charge subsequent purchases, as shown in the diagram
above. Other Token Service Providers (TSPs) generate their
own tokens. This is the case for the major card schemes and
Apple Pay.
As an acquirer, Adyen is able to process tokenized payments for
online and/or contactless payment methods. A good example of
this is Apple Pay, which uses payment tokens both for online and
(contactless) in-store transactions.
Who it’s for
Tokenization is suited to any businesses with subscription- based
business models or which generate significant business with repeat
customers. Because tokens can be securely stored, and used to
enable “one-click” payments for future transactions, tokenization
is of particular interest to businesses that aim to give as smooth a
shopper flow as possible at the checkout stage.
Cardholder Merchant Adyen Card Scheme Network Issuer
Adyen Tokenization Service
PANTokenized Payment
Benefits for merchants
There are a number of benefits to tokenization for merchants
• Cost savings: Tokenization by Adyen takes on the burden of
managing cardholder data storage in a secured way, thus
reducing the costs involved with meeting and monitoring
Payment Card Industry (PCI) compliance.
• Increased security: If fraudsters manage to steal tokenized
data, they cannot use the stolen tokens to pay online since
they are unable to link the token to payment information
stored securely by the payment partner.
• Enabling one-click (or even “0-click”) payments for shoppers:
Tokenization enables merchants to offer shoppers the
possibility to save their payment details it in a secure
manner, so that the next time they make a purchase they
do not need to re-enter their payment data. One-click
payments significantly increase conversion at he checkout
page through streamlining they payment process for
shoppers.
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