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Will Tokens Replace Plastic Credit Cards?

Many consumers don’t feel as safe shopping with a credit card as they did before big box retailers such as The Home Depot had customers’ payment card information stolen in data breaches.

The growing concerns about credit card security is piquing interest in a different kind of payment method, and tokenization is an alternative, according to an article from Entrepreneur.com.

Here are some specifics on tokenization from the Entrepreneur.com article:

“In the credit card world, tokenization means taking credit card account numbers out of merchants’ hands, replacing them with strings of characters–essentially, digital tokens–that would, theoretically, be useless if stolen by criminals. A new token can be created for each transaction, making even a one-time purchase at a small online retailer feel more secure. Or busy merchants can assign their own token to each consumer, meaning a stolen database couldn’t be used at any other retailer. Only banks would know consumers’ real account information.”

Credit card companies, including American Express and Visa, have developed token systems, the article says.

However, if tokens replace credit cards, the transition won’t be quick because merchants haven’t agreed overall on how tokens should work or how to eliminate possible security risks, the article says.

To read more about tokenization, click here.


About Sara Logel

As NRHA’s market research analyst, Sara conducts organic research and stays abreast of industry trends to help hardware retailers better run their business. Sara also contributes to editorial content in Hardware Retailing magazine. Sara received her B.S. in Marketing and Spanish from Butler University and, after graduation, began her career with NRHA. Sara enjoys traveling, being outdoors and exploring the city of Indianapolis.

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