Imagine a world where payments are seamless, customer data is secure, and merchants can easily manage a multitude of payment options while still providing the best customer experience. That’s the goal of unifying payment credentials. Payment tokenization is a crucial technology that is no longer a luxury but a necessity for merchants looking to thrive in today’s digital economy.

In a PaymentsJournal podcast, Sheena Cherian, Director of Product Management at Worldpay, and Don Apgar, Director of Merchant Services at Javelin Strategy & Research, discussed the evolution of payment tokens and highlighted how partnering with a trusted expert can help merchants maximize their full potential.

Think of tokenization as giving each credit or debit card a secret nickname or surrogate value. Instead of storing a customer’s actual card details on an e-commerce site, merchants can store this surrogate value—a unique string of characters called a token. While this token has no intrinsic value, it acts as a secure placeholder and is mapped back to the underlying card during authorization. Tokenization technology was introduced in the early 2000s with acquirer tokens, sometimes called merchant tokens. These were the first steps but had limitations.

Initially, acquirer tokens were designed to protect cardholder data and fight fraud. Network tokens emerged next, offering more security. Network tokens involve card networks like Visa and Mastercard and add another layer of protection. However, even these tokens are not foolproof. Setting them up involves coordination between several players: the merchant, the customers, and the card issuer.

As retailers began adopting channel-specific strategies and processor-specific tokens, the pursuit of more advanced technology created new hurdles, such as managing multiple tokenization systems and reconciling data across different platforms.

Ideally merchants would tokenize every transaction to create a complete picture of the customer’s shopping journey. While this helps personalize offers and improve overall experience, merchants also need flexibility. They might work with different payment processors (PSPs) or other service providers and tokenization shouldn’t restrict these choices. So how did we get here?

Today’s shoppers expect a seamless experience as they constantly switch between devices and channels. “I could be starting my journey on an iPad, browsing through different products on a retailer’s site, and then pick up where I left off on my mobile device,” said Cherian. “The seamlessness extends to the methods in which I can make a payment.”

While beneficial for customers, this omnichannel journey can create a major headache for merchants: how can they keep track of their customers across various touchpoints? Each device and channel can generate a unique token, making it difficult to recognize the same customer moving between platforms. This can lead to issues like misapplied loyalty points and an increase in friendly fraud.

“Our recent research on omnichannel payment strategies revealed a core issue,” said Apgar. “How do merchants unify these tokens and get a clear view of the customer journey?”

Some merchants are tackling this by building their own token vault—a highly secure, specialized data hub that protects sensitive information—or partnering with specialized vendors. This gives them control over token generation and flexibility with different payment processors (PSPs). But running a private token vault is expensive, even for large businesses. “Your tokens are only useful within your own system,” said Cherian. “If no one else can read them, managing your vault becomes a real burden.”

For merchants seeking an orchestrated payment environment without the headache of managing their own vault, Vaulting as a Service (VaaS) offers a compelling solution.

“A few larger merchants have included their own token vault as part of a larger orchestration strategy and so by controlling the vault they have ultimate flexibility to link tokens and engage PSPs as needed,” said Apgar. “But running a vault is expensive.”

Worldpay has stepped in to help merchants overcome this challenge.

“Our standalone payment credential platform helps merchants manage, unify and leverage their payment credentials for a variety of use cases,” said Cherian. “We offer our own acquirer tokens, network tokens and life cycle management for both cards and tokens. We’ve intentionally designed our platform to avoid silos. Think of it as a beehive: different honeycombs representing different token types and services work together within the hive, creating a powerful synergy.”

Worldpay’s payment vault acts as a secure central hub of the credential management platform, ensuring sensitive data is segregated and protected from unauthorised access.

While the company has boundless capacity to solve current and future merchant challenges with tokenization, Cherian highlights three methods for deploying payment credentials, managing everything from tokens to other sensitive customer data like Personal Account Number and Personally Identifiable Information. 

The first approach is designed for merchants who want a simple solution. Worldpay’s fully managed service handles everything, providing secure network tokens with no effort required from the merchant.

The second approach is for merchants who require more control. Worldpay offers a SaaS model via API access that enables integration with external systems while leveraging the benefits of its credential platform.

Finally, the third and most comprehensive approach incorporates the idea of a universal token. “Our platform enables merchants to work with multiple acquirers while providing a single, unified view of their customers’ shopping journey across all channels. This is what merchants need,” said Cherian. This approach solves the challenges of security, customer visibility and platform flexibility all at once.

As Cherian explained, it’s important to select a payment service provider with a deep understanding of payment credentials. This expertise, honed through years of experience, experimentation, and research, allows them to effectively navigate complex use cases. Partnering with a PSP who is dedicated to working closely with merchants ensures optimal payment solutions and seamless integration.