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National Restaurant Association - Tokenization FAQs

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Payments HQ

Tokenization FAQs

Tokenization is the process of replacing a card’s primary account number (PAN) with a unique alternate card number, or “token.” Tokens can be used for mobile point-of-sale transactions or in-app purchases. A token is a numeric value that acts as a substitute for a PAN, enabling each eligible device to have a unique token.

Tokenization leverages existing payments infrastructure and messaging formats for cardholder identification and verification and provisioning. Tokenization also provides EMV-like security for payments on connected devices.

Q: Is tokenization standardized in the industry?

A: Yes. In October 2013, MasterCard worked with Visa and American Express to propose a new standard for digital payments. The purpose of the standard was to provide detailed technical specifications for an interoperable payment tokenization solution benefitting acquirers, merchants, issuers, and cardholders.

Q: What are the benefits of tokenization?

A: Tokenization can reduce fraud related to digital payments by making transactions more secure by masking the cardholder’s card number with a token and including a dynamic component with each transaction. It also takes the security of a physical EMV chip and applies it to non-card environments, including proximity, mobile, and internet payments.

  • Restaurant operators may see reduced chargeback risk from more secure transactions, as well as faster checkout experiences, new payment acceptance options and more ways to sell.
  • Consumers will be enabled with new ways to pay more securely and conveniently, through numerous devices and with a better checkout experience.

Q: Is a one-time use token created for each payment transaction?

A: Yes. For each payment transaction the same token is used with dynamic cryptography that is unique for that transaction.

Q: What are the benefits to restaurant operators? 

A: Digital wallets that use tokenization offer a layered approach to security, leveraging current and emerging authentication measures and transaction data to influence acceptance and account for ongoing adoption challenges.

Restaurant operators can leverage this technology to deliver a safe and enhanced customer experience, resulting in reduced cardholder shopping cart abandonment, speed at checkout, reduced declines, and improved economics (e.g., liability shift, reduced fraud).

Q: What are the implications on chargebacks and liability rights?

A: Tokenized transactions follow the existing chargeback rules as contactless, EMV, and SecureCode transactions. The liability for these transactions remains with the issuers. The Revised Standards for DSRP Transactions and Chargeback Processing bulletin published on August 1, 2014 clarified that issuers will have the liability for both DSRP and contactless transactions that use the MasterCard Digital Enablement Service.

MasterCard, www.mastercard.com, is a technology company in the global payments industry. MasterCard operates the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. MasterCard’s products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone.


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