Historically credit card integrations use vault tokens to secure card data- this means that each card entered into the system will be encrypted and entered into your own personal account. This allows for secure card data, and adheres to the highest PCI requirements. However, there are limitations of vault tokens - they are hard to move, and are static (I.e once entered, they cannot change).
We are excited to announce a new feature that has already been deployed to your CloverConnect account - Network tokens.
Network tokens are a new development within the industry that improves the payment experience for both you and your customers through increased security and better functionality.
What are Network Tokens?
Network tokens are a type of secure, digital representation of a cardholder's account information used for processing payments. Instead of transmitting the actual credit or debit card number during transactions, a unique token is generated by the card networks and used. This helps protect sensitive payment data from fraud and misuse, while also making the tokens dynamic - meaning they can be updated without changing the underlying card details.
Why Use Network Tokens in Payment Processing?
Using network tokens provides multiple benefits to merchants, and consumers. Here are some of the key advantages:
Enhanced Security
- Reduced Risk of Fraud: By replacing sensitive card information with a token that cannot be used outside of its intended purpose, the risk of data breaches and fraud is significantly reduced.
- Protection Against Data Breaches: If a token is intercepted during a transaction, it is useless to fraudsters as it does not reveal the actual card information.
- Dynamic Data: Network tokens can include dynamic elements, such as cryptographic security keys, making it even more difficult for unauthorized parties to use them.
Higher Authorization Rates
- Improved Transaction Approval: Transactions processed with network tokens often have higher approval rates because they include enriched data that helps issuers validate the transaction.
- Fewer False Declines: Tokens include additional details that can assist in identifying legitimate purchases, reducing the number of false declines and improving customer satisfaction.
Seamless Customer Experience
- Automatic Card Updates: When a consumer’s card is reissued (due to expiration or loss), the network token can be automatically updated with the new card details. This reduces payment disruptions and the need for customers to manually update their card information with you.
- Frictionless Transactions: Tokenization allows customers to make repeat purchases or subscription payments without re-entering their card details, providing a smoother checkout experience.
Compliance and Data Privacy
- Reduced PCI Scope: Tokenization helps merchants minimize their PCI DSS (Payment Card Industry Data Security Standard) compliance burden by reducing the amount of sensitive card data they store and process.
- Enhanced Privacy Controls: Consumers can trust that their payment information is protected and only used for its intended purpose, increasing trust in your brand.
How Do Network Tokens Work?
- Token Generation: When a customer initiates a payment, the payment information is sent to the payment processor, which generates a token to represent the card data.
- Transaction Authorization: The token is used in place of the card number during the transaction. The payment network maps the token to the original card information securely and authorizes the transaction.
- Token Lifecycle Management: Tokens can be dynamically updated if there are changes to the customer’s account, like card expiration or reissuance. Meaning you do not need to recollect card information, the system will automatically charge the new details.
Final Thoughts
Network tokens provide a secure, efficient, and reliable way to process payments. They help reduce fraud, improve transaction approval rates, and offer a seamless experience for customers. By leveraging network tokens, businesses can build customer trust, streamline payment processes, and ultimately drive growth.
Click here to find out how network tokens appear in your CloverConnect reporting