What is tokenization

Tokenization is a powerful security measure used by merchants, payment processors, and banks to safeguard sensitive financial and personal information from cybercrime and fraud. Tokenization replaces a user's payment details, such as credit card numbers, expiration dates, and card verification values or codes (CVV or CVC), with non-specific identifiers called tokens. These tokens are randomly generated when a customer provides their payment information at the point of sale (POS) or on an ecommerce website.

Advantages of tokenization

• Enhanced security—Tokens prevent the exposure of sensitive data during transactions.
• PCI DSS compliance—Tokenization helps merchants meet Payment Card Industry Data Security Standard (PCI DSS requirements, reducing the scope and cost of compliance efforts.
• Secure storage—Merchants can store tokens without risking customer account numbers or other sensitive data.
• Fraud prevention—Third parties can't reverse-engineer tokens to obtain payment information.
• Improved authorization rates—Payment tokens can enhance the gateway payment authorization rates, leading to fewer declined transactions.
• Recurring payments—Tokenization supports subscription billing and uninterrupted service for subscription-based businesses.

Clover Ecommerce token types

Clover supports various token types, including card tokens, ACH tokens for bank transactions, and gift card tokens.

Related topics

• Blog: Ecommerce Tokenization: Understanding Methods that Keep Card Data Safe
• Ecommerce card tokenization