Universal Payment Tokens or Network Tokens? Pros and Cons
Blog post from Basis Theory
Payment tokens are secure references to cardholder and other sensitive data stored elsewhere, helping merchants reduce PCI compliance burdens and avoid retaining plaintext personal information, which differs from encryption because tokens cannot be reversed into the underlying data. The main token types serve distinct purposes: PSP tokens offer simple implementation but generally bind merchants to a single payment provider; network tokens, issued by card networks for specific merchant-card pairs, can lower costs and improve security while remaining limited to payment credentials; and universal tokens, often supplied by third-party vault providers, can protect both payment and non-payment data across processors, networks, and channels. Selecting an approach depends on a merchant’s customer-experience goals, security needs, technical capabilities, processor strategy, and tolerance for vendor lock-in or service disruption. The discussion recommends considering combinations of token types to improve authorization rates, payment routing flexibility, transaction costs, compliance, and control over payment data.
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