Tokenization in Payments 201 - Processes & Infrastructure
Arthur Bedel ?? ??
Global Payments Leader | Co-Founder of Connecting the dots in Payments... | FinTech Advisor | Ex-Pro Tennis Player
Tokenization in Payments 201 — how the evolution of Tokens is impacting Payments & enabling a Multi-Processor model ??
Refresher on Payment Tokens ??
? ???????????????? ????????????: Generated by transaction processors, usually restricted to specific merchants - Nuvei , Adyen , Stripe
? ???????????? ????????????: Created by card issuers, like Visa or 萬事達卡 , often for digital wallets such as 苹果 Pay or Google Pay
? ?????????????? ????????????: Produced by credit card networks themselves, not bound to specific issuers - Visa , 萬事達卡 , American Express
? ?????????????? ????????????: A newer category generated on behalf of issuers & merchants, usable across multiple locations
? ???????????????? ????????????: Tailored for individual merchants, these can be integrated into a merchant's specific customer journey & can link to multiple other types of tokens
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3rd-party providers — VGS , Basis Theory , Spreedly , Yuno — are able to generate agnostic tokens interoperable across channels & providers
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?? Tokenization in Payments 101 for more explanations: https://www.dhirubhai.net/posts/arthur-bedel_pans-activity-7188898074646179840-ktVh?utm_source=share&utm_medium=member_desktop
PAN vs BIN Lookup:
??PAN — Primary Account Number refers to the unique 16-digit number on a payment card. It identifies the cards origin (issuer), type of card (credit, debit, prepaid…), card brand ( Visa , 萬事達卡 ...), country of issuance etc.?
??BIN — Bank Identification Number refers to the first 6-8 digits of a payment card’s PAN. It identifies the institution that issued the card. ?
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?? Merchants have historically worked with a 6-digit BIN Lookup and built sophisticated BIN mapping logic. Card-Not-Present (CNP) Merchants would often store cards in a 6+4 format (6-digit BIN & 4-digit personal identifier).?
??Major Industry Change — Issuers are now moving to 8-digit+ BIN which makes the existing 6-digit lookup no longer efficient for merchants to get the proper information to enable a transaction. This also implies that the data stored will no longer be actionable creating a major issue for merchants to create a frictionless experience.?
In order to stay relevant, opting for a PAN Lookup will maximize the card attributes a merchant gets access to, making for stronger business decisions on currency, exchange rates, debit routing networks & more.
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Apple introduced Merchant Tokens (MPAN) ??
Traditionally, after cardholder verification, a device-specific network token (DPAN) replaces the customer's Primary Account Number (PAN) in Apple Wallet.?
This DPAN makes transactions secure, as it's bound to the device and unusable if stolen.?
However, drawbacks include the need for a new DPAN when changing devices and the issuance of multiple DPANs across different devices for the same PAN, complicating merchant processes.
???????????????? ???????????? (????????) are not device-bound but linked to the user’s iCloud, facilitating device changes without affecting the token.?
?? Visa announced a mandate for merchants to use MPAN instead of DPAN for Standing Instruction transactions starting July 30 2025 making 苹果 and other merchants switching their tokens.
RoadSync maintained a seamless payment processing experience with their PSP. Unfortunately, s**t happens & SVB collapsed impacting its payment processing abilities.?
The inclusion of an agile & flexible tokenization provider (VGS) & cloud infrastructure ( Amazon Web Services (AWS) enabled RoadSync to switch payment providers over a single weekend.? Infrastructure displayed in the diagram below ??
Ultimately, tokenization is a core element of a flexible payment infrastructure. Think carefully about it, you never know what can happen ??
Source: VGS , Amazon Web Services (AWS) , 苹果 & RoadSync
Use Case #1: https://www.verygoodsecurity.com/case-study/roadsync
Use Case #2: https://www.verygoodsecurity.com/blog/posts/apple-pay-is-rolling-out-merchant-tokens-mpans
Use Case #3: https://www.verygoodsecurity.com/network-tokens
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?? The Payments Brews ??: https://lnkd.in/g5cDhnjC ?
Principal (Payments, Fintech, Web3) at Boston Consulting Group (BCG)
5 个月Mohamad Kobrosly
The Payment Solutions Guy — I'll help you decrease processing fees by 20%, and improve approval rates (guaranteed) by finding the best Payment Providers for your business | Visit my website to learn how
5 个月It's exciting to see how the evolution of tokens is enabling a multi-processor model and creating a more flexible payment infrastructure Arthur Bedel ?? ??
The self proclaimed, most influential person in payments. Except for Jack Dorsey or those two bros from that other company & definitely not Satoshi Nakamoto, but after all those guys it's me.
5 个月Fascinating topic. Tokenization techniques are like secret codes for secure payments.
Digital Transformation Consultant @ Hafz | Digital Solutions Architect | Fintech | AI | IoT | Big Data | Data Analytics | Pioneering Fintech Solutions to Revolutionize Traditional Business Models
5 个月Excited to explore the evolution of tokenization in payments. ??