Technology

The power of tokenization in payments

Why tokenization, payments security, and AI commerce are changing the game

22 Oct 2025 . 8 min read

Tokenization is quickly becoming a must-have in the world of payments. It’s not just about keeping things secure – it’s about making payments quicker, easier, and smarter. For businesses looking to stay ahead, embracing tokenization could mean better security, a smoother experience for your customers, and a competitive edge in a digital-first world.

How tokenization works: keeping data safe and payments simple

Instead of using real card numbers, tokenization swaps them out for unique “tokens” that are useless to hackers. When you add a card to Apple Pay, for example, it’s the token – not the real number – that’s stored. Even if there’s a data breach, those tokens can’t be used.

Tools like Visa Token Service and Mastercard’s Digital Enablement Service keep tokens secure all the way through the payment process. Merchants never see the real card data, and tokens get updated automatically when cards expire. Banks and issuers have a clear view, can spot dodgy activity right away, and keep fraud in check.

Industry shift: Mastercard, Visa, and the move past card numbers

Traditional 16-digit card numbers are on their way out. Mastercard is pushing for 100% e-commerce tokenization across Europe by 2030. Visa’s moving fast too, already tokenizing half the world’s digital transactions. This wave of change is happening faster than any previous shift in payment technology, driven by both innovation and the need for stronger security.

What this could mean for businesses: less fraud, more sales, happier customers

Tokenization helps tackle big headaches like payment fraud and lost sales.

Globally, it could help get back up to $20 billion lost every year to card fraud, cut down on the 71% of shopping carts that get abandoned, and boost approval rates for payments.

Compliance made easier: meeting regulations and staying protected

Regulations are pushing tokenization forward too. Europe’s PSD2 rules mean strong customer authentication is now a must, and India’s already gone almost fully tokenized for saved cards.

As fraudsters get smarter, tokenization is quickly becoming key for businesses that want to stay compliant and protect themselves and their customers.

The role of AI: smarter, safer shopping with agentic commerce

AI-driven commerce is here, and it needs tokenization to work safely. Think of AI agents, like digital helpers that can shop or pay on your behalf. With tokenization, these agents never see your real card number, and you can set limits on what they spend and where.

Companies like Visa and Mastercard are already rolling out “AI-Ready Cards” and special tokens for these agents. Services like Amazon’s “Buy for Me” or OpenAI’s Operator are making this a reality, and tokenization is what makes it all possible.

Real numbers, real results: why tokenization delivers

The data speaks for itself. Visa reports that tokenized online payments have cut fraud by 40% and increased approved payments by 5%. For a business pulling in £50 million a year, that’s potentially an extra £2.5 million in successful transactions.

Apple Pay, Google Pay, Samsung Pay – they already show how well tokenization works at scale, delivering lower fraud and higher approval rates.

Final thoughts: why act now?

Tokenization isn’t something for tomorrow, it’s already here and changing how we pay and do business. Companies that get on board will see less fraud, more successful payments, and happier customers.

As universal tokenization, biometric authentication, and AI-powered shopping come together, now’s the time to future-proof your payments and get ahead in the digital economy.

Speak with your relationship manager to learn more about the future of payments or get in touch with us here.

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