What is payment tokenization?

The tokenization is defined as “the process of converting rights to an asset into a digital token on a blockchain”. This means that you can have e.g. dynamic virtual cards for your customers without the need to create new cards every time they are needed, just generate dynamically created tokens that represent specific user’s rights to products or services.

That would be a great way to work with customers’ data, as well as to replace static cards, where your customer’s information is stored – you can make it much more secure. Also it depends on the business model – some business models might not need any plastic card at all! You could create tokens for selling products or services, receiving payments and so on.

The beauty of this technology is that it can be applied in a lot of different areas. Let’s take a look at some possible use cases.


In ecommerce, tokenization can be used to streamline the checkout process. For example, by using tokens for payment instead of the personal information, the checkout process becomes smoother and faster.

Crypto payments

Cryptocurrencies became extremely popular in recent years, but merchants still struggle with the volatility of prices on these virtual currencies. Imagine that you could use a crypto token as an equivalent to fiat currency – then you would avoid all risks caused by crypto price fluctuations.

Loyalty programs

In the same time, merchants can offer an additional service to their customers by tokenizing their loyalty points instead of just offering a discount. If a customer decides to purchase a product that is covered with his loyalty points, he will get them back in tokens and could spend it later on or sell it if he doesn’t need the points.

Data security

In this digital era, data breaches are becoming more and more common. However, by tokenizing sensitive information, such as social security numbers or credit card numbers, businesses can make their data much more secure.

Smart contracts

Finally, blockchain technology can be used to create smart contracts. These are contracts that are self-executing, meaning that once the conditions of the contract are met, the contract will automatically be executed. Tokenization can be used to create these contracts, for example by using tokens to represent the assets that are being traded.

There are already a few companies that are using tokenization in order to streamline their business processes. For example, a company called Monetizr is using tokenization to create a system where gamers can be rewarded for their gaming achievements by receiving tokens that can be used in the gaming industry. Another company, called Revelry, is using tokens to represent loyalty points for their customers.

So, as you can see, payment tokenization is still an emerging technology. However, there are already many companies that are looking into it and recognize its potential. For example, TokenCard project, which provides customers with a digital card that allows them to manage their crypto tokens in the same mobile app where they store their virtual cards for everyday use.


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Maria Jones

Maria Jones is blogger and content writer who write many articles on SEO, Business, Web Design and Technology. She enjoys reading new thing on internet. She spends lot of time on social media.

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