Jorn Lambert, Chief Product Officer of Mastercard, highlighted the benefits of payment tokenization in various applications, emphasizing its importance for merchants, card issuers, and customers. With the rise of innovative payment methods, tokenization is becoming increasingly popular. This technology, developed by EMVCo in 2014, replaces card numbers with tokens for transaction verification, minimizing the risk of data breaches.
Payment tokenization substitutes the primary account number on a card with a unique, non-sensitive token value, restricted to specific merchants, channels, or devices. This method, in practice for over a decade, is still not widely understood by company financial executives despite the proliferation of payment options.
Lambert stressed the need to rethink the security architecture of payment tokenization. In a hyper-connected world where credentials are stored on billions of mobile devices and global servers, he warned of the inevitability of data breaches by bad actors, regardless of robust firewalls. Tokenization's strength lies in substituting sensitive information with digital tokens, rendering any stolen data useless to fraudsters.
To illustrate, Lambert compared it to hotel key transformations—from physical keys to digital cards that can be deactivated when not in use. For Mastercard, the journey into payment tokenization began over a decade ago, initially focusing on physical card credentials and subsequently expanding into digital and mobile domains.
Mastercard achieved one billion tokenized transactions over three years and now processes one billion such transactions weekly, showcasing the growing importance and adoption of this secure payment method.
