How Does Tokenization Work?

The process of Tokenization involves various parties like the merchants, card networks, issuer, acquirer, customer, and token requestor.

By tokenizing assets and representing them as digital tokens on a blockchain, it allows for more efficient and transparent buying, selling, and trading of assets, as well as more efficient record-keeping and verification of ownership. Additionally, tokenization opens up the possibility for fractional ownership of assets, allowing a larger group of investors to participate in high-value investments. Blockchain technology experts utilize blockchain development to facilitate the tokenization process and custom Blockchain solutions, allowing for the creation of digital assets and secure transfer of ownership.

Under the Tokenization process, the particular customer MasterCard details are replaced with the alphanumeric code or tokens using an algorithm. The generated code cannot take you to the first data.

The flow includes the below steps from making the MasterCard purchase to the top of the payment process.

  1. Collect payment details
  2. Generate a token
  3. Send token to the payment processor
  4. Send the token encrypted to the ACH network.
  5. Authorize and notify relevant parties

The good news is that with the proper systems in situ tokenization hardly requires additional resources to execute a secure payment process for thousands if not many transactions.

Scale your Blockchain projects with us

With today’s innovations within the payments space, tokenization are often weakened into a general five-step process.

  1. Collect payment details
    At the primary step of the tokenization process, the customer provides their payment details. This will either happen through a web checkout process or a POS system.
    The process is that the same whether the transaction is occurring online, through an ecommerce payment gateway, or face to face through a point-of-sale system.
  2. Generate a token
    The checkout platform creates the necessary alphanumeric ID or "token" after receiving the payment information. So rather than Stone Mick’s data being processed as 123 456 789, the tokenization process turns it into something along the lines of HF6223785T7. The latter may be a kind of representation of Stone Mick’s real data, which is what to verify and finalize a transaction.
  3. Send token to the payment processor
    The token is encoded before being transmitted to the merchant's payment processor. Meanwhile, the critical payment information is kept safe in the transaction gateway's "vault." It's also how a payment service may connect the token to the original payment data.
    Other pertinent information is linked to the token during this procedure. This will be things just like the sort of payment wallet used or who the holder of that wallet is.
  4. Encrypt the token before sending it to the ACH network
    Once the encrypted token is received by the merchant’s payment provider, the knowledge is once more encrypted before being sent to the corresponding ACH network for verification.
  5. Authorize and notify relevant parties
    If the payment is permitted, confirmation of the finished transaction is shipped to all or any parties involved within the process. This involves both the merchant and the payment processor, as well as the client.

The customer's purchase is now complete, and they can proceed to the next phase of the purchasing process, if any. This five-step procedure occurs instantaneously, increasing the convenience factor of tokenization.

BENEFITS OF TOKENIZATION

Tokenization provides several advantages for both the company and its clients. It may significantly increase the organization's productivity and performance while accepting payments. The cardboard payment is out of scope and not actually stored within the business’s systems, there's much less impact of a knowledge breach or loss of knowledge. The key goal is to scale back any risks involved around taking payments, especially after the increased fines and penalties incurred during a data breach following the introduction of GDPR. Rather than encrypted data and decryption keys being stored within the businesses’ systems, hackers only have access to reap tokens with no exploitable value.

Benefits for Organizations

  • A much quicker payment process for repeated purchases.
  • Less chance of abandoned sales or failed payments.
  • The choice to provide Payment Plans to assist spread the value of high value purchases.
  • Removes valuable data from the company network, reducing the impact if a knowledge breach was to occur.

Benefits for Customers

  • They’re not spending unnecessary time typing altogether their card data for each purchase.
  • They don’t necessarily need the cardboard at hand when making a sale.
  • There is a smaller amount chance for mistakes when providing card details again and again.
  • They can comfortable knowing their sensitive card data isn't directly interacting with the business they're making the payment to.

LET'S BUILD TOGETHER ON BLOCKCHAIN

WHAT IS TOKENIZATION USED FOR ?

Tokenization is employed to secure many various sorts of sensitive data, including.

  • Payment card data
  • U.S. Other national identity numbers, such as Social Security numbers
  • Telephone numbers
  • Passport numbers
  • Driver’s license numbers
  • Email addresses
  • Bank account numbers
  • Names, addresses, birth dates

As data breaches rise and data security becomes increasingly important, organizations find tokenization appealing because it's easier to feature to existing applications than traditional encryption.

Next Article

Is Token-based Authentication Secure?

Research

NFTs, or non-fungible tokens, became a popular topic in 2021's digital world, comprising digital music, trading cards, digital art, and photographs of animals. Know More

Blockchain is a network of decentralized nodes that holds data. It is an excellent approach for protecting sensitive data within the system. Know More

Workshop

The Rapid Strategy Workshop will also provide you with a clear roadmap for the execution of your project/product and insight into the ideal team needed to execute it. Learn more

It helps all the stakeholders of a product like a client, designer, developer, and product manager all get on the same page and avoid any information loss during communication and on-going development. Learn more

Why us

We provide transparency from day 0 at each and every step of the development cycle and it sets us apart from other development agencies. You can think of us as the extended team and partner to solve complex business problems using technology. Know more

Other Related Services From Rejolut

Crypto Exchange Developers
Cryptocurrency Development

In this article, we will walk you through creating your own cryptocurrency token or coin.

Solana vs Ethereum

In terms DeFi Ethereum and Solana both are trying their level best to capture the potential market.

Cardano vs Solana
Cardona vs Solana

So, here we will be discussing one of the most top trending Blockchain protocols named Solana Vs other Blockchain.

Why Rejolut?

1 Reduce Cost

We’ll work with you to develop a true ‘MVP’ (Minimum Viable Product). We will “cut the fat” and design a lean product that has only the critical features.

2 Define Product Strategy

Designing a successful product is a science and we help implement the same Product Design frameworks used by the most successful products in the world (Ethereum, Solana, Hedera etc.)

3 Speed

In an industry where being first to market is critical, speed is essential. Rejolut's rapid prototyping framework(RPF) is the fastest, most effective way to take an idea to development. It is choreographed to ensure we gather an in-depth understanding of your idea in the shortest time possible.

4 Limit Your Risk

Rejolut RPF's helps you identify problem areas in your concept and business model. We will identify your weaknesses so you can make an informed business decision about the best path for your product.

Our Clients

We as a blockchain development company take your success personally as we strongly believe in a philosophy that "Your success is our success and as you grow, we grow." We go the extra mile to deliver you the best product.

BlockApps

CoinDCX

Tata Communications

Malaysian airline

Hedera HashGraph

Houm

Xeniapp

Jazeera airline

EarthId

Hbar Price

EarthTile

MentorBox

TaskBar

Siki

The Purpose Company

Hashing Systems

TraxSmart

DispalyRide

Infilect

Verified Network

What Our Clients Say

Don't just take our words for it

I have worked with developers from many countries for over 20 years on some of the most high traffic websites and apps in the world. The team at rejolut.com are some of most professional, hard working and intelligent developers I have ever worked with rejolut.com have worked tirelessly and gone beyond the call of duty in order to have our dapps ready for Hedera Hashgraph open access. They are truly exceptional and I can’t recommend them enough.
Joel Bruce
Co-founder, hbarprice.com and earthtile.io
Rejolut is staying at the forefront of technology. From participating in, and winning, hackathons to showcase their ability to implement almost any piece of code. To contributing in open source software for anyone in the world to benefit from the increased functionality. They’ve shown they can do it all.
Pablo Peillard
Founder, Hashing Systems
Enjoyed working with the Rejolut team. Professional and with a sound understanding of smart contracts and blockchain. Easy to work with and I highly recommend the team for future projects. Kudos!
Zhang
Founder, 200eth
They have great problem-solving skills. The best part is they very well understand the business fundamentals and at the same time are apt with domain knowledge.
Suyash Katyayani
CTO, Purplle

Think Big, Act Now & Scale Fast

Speed up your blockchain adoption with our proven framework.

We are located at

We have developed around 50+ blockchain projects and helped companies to raise funds.
You can connect directly to our Blockchain developers using any of the above links.

Talk  to Blockchain Developer