Tokenization (payments).

In plain English

Tokenization swaps a real card number for a randomly generated stand-in, called a token, that works for payments in one specific context and has no value outside it. The real number stays in a secure vault run by the card network or a service provider, and the merchant stores only the token. If the merchant's database is breached, the stolen tokens cannot be used anywhere else. Network tokens can be locked to a single merchant or a single device, and they update automatically when a card is reissued, which is why saved cards keep working after a replacement arrives in the mail.

01Why it matters

It is the reason a breach at a store you shopped at does not automatically put your card number into circulation, and the reason your subscriptions keep charging after a new card arrives.

02The math, step by step

Say a retailer stores 2 million saved cards. Tokenized, a breach hands the attacker 2 million strings that only work at that one retailer, which can then kill them all at once. Untokenized, the same breach hands over 2 million usable card numbers.

Illustrative example. The amounts here are hypothetical, chosen to show how the math works, not real quoted rates or figures.

03What this is NOT

04Receipts

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