What are network tokens?

Network tokens are digital stand-ins for a customer’s actual card number (PAN). Unlike gateway or merchant-specific tokens, network tokens are issued and maintained directly by the card networks—Visa, Mastercard, American Express, and others.

These tokens are securely mapped to the original card but carry none of the sensitive card data during a transaction. What makes them powerful is token lifecycle management—they are automatically updated when a customer’s card is reissued or expires, which is especially beneficial for recurring billing, subscriptions, and stored credentials.

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How Do Network Tokens Work?

Here’s a simplified view of how network tokenization works in practice:

• The merchant, PSP, or token requestor asks the card network for a token via a certified integration.
• The card network issues a unique network token that replaces the card’s primary account number (PAN).
• This token is used for transactions going forward—not the raw card number.
• Tokens are often domain-restricted, meaning they can only be used by the merchant, device, or platform they were issued for—providing an extra layer of security.

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Key Benefits of Network Tokens

1. Enhanced Payment Security

Because the token is not the actual card number, it’s worthless if intercepted. This significantly lowers the risk of fraud, especially in card-not-present (CNP) environments like eCommerce.

2. Automatic Card Updates

When a customer’s card expires or is replaced, the token updates automatically behind the scenes. This reduces failed transactions and boosts subscription continuity—a win for both merchants and consumers.

3. Higher Authorization Rates

Network tokens are recognized and trusted by the card networks. In many cases, this results in higher approval rates than transactions using raw PANs—particularly in recurring or stored payment scenarios.

4. Better Customer Experience

Fewer declines. Fewer interruptions. And no need for customers to manually update their card information when a card changes. That adds up to higher conversion rates and greater customer satisfaction.

5. Stronger Brand Trust and Lower PCI Scope

Using network tokenization demonstrates a proactive approach to data security, which builds trust and can reduce PCI DSS compliance requirements.

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Visa Token Service vs Mastercard Card-on-File Tokenization

Visa Token Service (VTS)

VTS is Visa’s dedicated network tokenization platform. It integrates directly into the Visa network and enables secure storage and use of tokens across all digital commerce use cases—from mobile wallets to eCommerce checkouts.

Mastercard Card-on-File Tokenization

Mastercard offers its own network tokenization service for stored credentials. Like VTS, it supports automatic lifecycle updates and is designed to enhance security, reduce declines, and improve approval performance.

Both systems are part of a broader industry initiative to standardize tokenization and drive adoption across merchants and PSPs.

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Who Should Use Network Tokens?

Network tokenization is quickly becoming a best practice across the industry. Here’s who benefits most:

• eCommerce merchants: Reduce fraud, increase approval rates, and create a smoother checkout flow.
• Subscription services: Avoid service interruptions due to expired or replaced cards.
• Payment service providers (PSPs): Improve their merchant offering by boosting conversion and reducing fraud exposure.
• Financial institutions: Lower operational costs and enhance compliance with card network mandates.

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Why Network Tokens Matter for the Future

Network tokens are more than just a security feature—they’re a strategic enabler for digital commerce.

At Dintero, we help businesses adopt modern payment infrastructure that supports tokenization, smart routing, and high conversion. As Visa and Mastercard continue to push tokenization forward, merchants that embrace this shift early gain a real competitive edge.

The result?

More approvals. Less fraud. Happier customers.

Want to know how Dintero can help you implement network tokenization?

Get in touch with our payment experts or read more in our documentation

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