Understanding Card Tokenization Failures

Get an understanding of the common causes, business impacts, and solutions to card tokenization failures.

Secure transactions are absolutely necessary for your payments stack. Card tokenization is crucial to the security of your payment stack and your customers’ payment data. However, even this system isn’t immune to hiccups. Let’s look at the nuances of tokenization failures and how platforms like Spreedly provide solutions.

Defining Card Tokenization Failures

It’s crucial to understand what card tokenization failures are at their core. Tokenization is the process of substituting sensitive card data with a unique, non-sensitive equivalent, known as a token. This process ensures that even if there’s a security breach, the exposed data is useless without the original sensitive details. A failure in this system means that the card details could not be successfully tokenized. Such failures not only jeopardize the current transaction but can also expose sensitive data to potential security threats.

What is Card Tokenization? 

Card tokenization is critical for protecting sensitive cardholder data and reducing payment fraud. 

We talk often about tokenization here at Spreedly. Our team views the technology as essential for not only modernized payment security but also for streamlining payment processing. 

To give a brief recap of how tokenization works, a token is created by a card network or third-party service provider. Each token is completely randomized and uniquely assigned to a specific customer, merchant, and transaction. During the payment process, the customer’s real card information is swapped out with decoy information represented by the token. 

Tokens replace the credit card number entered by a customer before transmitting the data through the card processing network. The token, rather than the card number itself, travels along the specified payment rails and can only be mapped back to the original PAN by the token issuer or a secure vaulting provider. 

Your potential for a data breach increases alongside your digital payment volume. Tokenization technology allows you to convert high-value targets, like payment information, into useless decoys that have no exploitable value outside of their specific payment contexts.

What credit card tokenization offers is the ability to safely store and transmit card numbers without exposing the actual information. Even in cases where a token is intercepted, its data is meaningless without authorized access to the system and vault where tokens can be deciphered. 

Credit card tokenization both protects the consumer and can significantly reduce your PCI compliance scope, as you are no longer storing sensitive card data directly. 

Debit Card Tokenization vs. Credit Card Tokenization

Both credit and debit cards can be tokenized. 

However, debit card tokenization can have additional security considerations due to the card’s direct link to a customer’s bank account. Credit card tokenization providers typically include an added layer of fraud monitoring that may not be available for debit cards. 

Despite this, tokenization can improve security for either type of card. It allows merchants to improve or add new services to their payment system, like automated recurring billing or card-on-file. In either credit or debit card scenarios, adding tokens to the mix can make your payment processing smoother all-around, including when stored payment information needs to be updated. 

The growing adoption of tokenization is certainly spurred on by card networks themselves. Mastercard reports that 30% of all of its transactions globally are now tokenized. 

Adding tokenization to your payment stack can improve your company’s ability to swiftly adapt and adjust to challenges in payment processing. The evergreen nature of tokens make it far easier to keep your customers’ payment data updates, making checkout faster and easier for everyone. 

The Business Impact of Tokenization Failures

Every card tokenization failure translates into a lost sale for a business. If a customer making a purchase is met with tokenization failure,  not only will this result in immediate revenue loss, but it will also weaken the trust they have in your payment system. Now imagine this is 10 percent of your customer base, the collective revenue loss suddenly becomes significant. It can also lead to increased operational costs as businesses might have to allocate resources to address and rectify these issues.

Tokenization Service Denial Meaning

You may occasionally encounter cryptic messages that indicate a tokenization service denial or a tokenization failure. If you come face-to-face with token-related error messages, you’re most likely culprit is a failure at the point of payment initiation where the card is supposed to be tokenized.

Tokenization errors can disrupt the processing flow. Getting to the bottom of this type of issue requires a good understanding of how token services operate. 

Most tokenization is performed by a token service provider, which could be a standalone fintech company, a gateway, or even the card network itself (as with Visa Token Service or Mastercard MDES). A denial from the tokenization service can mean that the card data was invalid, improperly formatted, expired, or did not meet issuer rules. It might also occur if the service provider is temporarily unreachable or if fraud checks were triggered during the tokenization attempt.

You should monitor tokenization service denials as part of your broader payments performance framework to ensure you aren’t losing conversions due to preventable technical errors.

Error Tokenizing Card Number

A related and equally frustrating scenario is an “error tokenizing card number.” 

This error typically appears when something goes wrong during the process of converting the raw PAN into a token. It may result from:

• Improperly formatted card data (e.g., incorrect number of digits)
• Network or gateway timeout
• Merchant system misconfiguration
• Issues with the TSP or vaulting provider

When an error tokenizing card number occurs, the transaction cannot move forward because the token was never properly created. 

Merchants using open payments platforms like Spreedly can sometimes route the transaction through alternative providers, helping to preserve revenue and reduce friction in checkout flows.

Common Causes of Tokenization Failures

Tokenization is a delicate process, and a number of issues can disrupt it. It could be anything from a network error to a data mismatch. Understanding these challenges is the first step towards addressing and optimizing them.

Network and System Challenges

At the heart of many tokenization failures are technical glitches such as unstable connections or gateway downtimes. A break in the payment  network or an overwhelmed processor can instantly halt the tokenization process. Without an alternative gateway or payment processor this can lead to significant revenue losses.

Reach out to Spreedly to ensure you have reliable gateway connections and integrations.

The Importance of Accurate Information

Inaccurate or mismatched data is the most common culprit for card tokenization failure. If card details don’t align correctly, the tokenization request is generally doomed from the start. Fortunately there are ways to combat this.

• Always double-check card details
• Use platforms that validate information in real-time
• Educate users on the importance of accurate data entry

Navigating Security Protocols (PCI and Insufficient Vault Security)

Security is non-negotiable. However, rigorous protocols, while essential for safety, can sometimes impede the tokenization process. Card tokenization requests must align with stringent security measures. Any hint of a breach or non-compliance can lead to immediate failure.

Handling Invalid Cards

An expired or invalid card isn’t just a problem for immediate transactions – it’s also a roadblock for tokenization. Always ensure that cards are valid before initiating the process.

Duplicate Cards (AV)

Duplicate cards present a unique challenge in the tokenization process, leading to inefficiencies and potential failures. Tokenization systems are designed to detect and manage duplicate card entries, preventing the creation of unnecessary tokens. This proactive approach streamlines the process, ensuring efficiency and reducing errors.

Mastering Card Tokenization

In the complex landscape of digital transactions, Spreedly stands out with its advanced and reliable solutions. It’s not just about handling transactions; Spreedly’s approach encompasses a comprehensive understanding of security requirements and sophisticated card lifecycle management, making it a vital tool for businesses operating globally.

Adaptive Transactions

Spreedly’s primary asset is its adaptability in the face of changing digital transaction environments. By maintaining robust connections with an extensive network of gateways and payment services, Spreedly ensures transaction continuity. This flexibility means that if an issue arises with one route, the platform can swiftly switch to an alternative, maintaining the tokenization process without interruption.

Tokenization as a Shield

At Spreedly, tokenization is more than a feature; it’s the foundation of the platform’s security strategy. By converting sensitive card details into unique, secure tokens, each transaction is not only safer but also reinforces customer trust. This approach shields sensitive data, mitigating the risk of security breaches and reinforcing the safety of business transactions.

Card Lifecycle Management

Spreedly addresses the complexities of card lifecycle management with a comprehensive and user-friendly approach. The platform provides businesses with the necessary tools to update, manage, and monitor card details effectively. Proactive management of card validity and status through Spreedly reduces the likelihood of tokenization errors due to expired or compromised cards, streamlining the transaction process.

Spreedly Advanced Vault

A key feature of Spreedly’s infrastructure is its advanced vault, engineered for the secure storage and management of tokenized card data. This vault doesn’t just securely store cards; it is actively managed to ensure the ongoing integrity and relevance of stored tokens. Spreedly’s system routinely monitors and updates stored tokens to reflect changes in card details or expiration dates, ensuring that stored data remains current and transactions don’t decline. This active management of the vault significantly enhances the security and efficiency of payment processes, providing businesses with a reliable foundation for handling digital transactions.

Why You Should Care About Tokenization (& How To Start Using It)

Card networks becoming more active participants in tokenization shows that tokens are here to stay and are becoming a necessity, not just a nice-to-have.

These network tokens offer persistent identifiers that remain valid even when a consumer’s card number changes due to a lost card or reissue. For merchants, network tokens improve continuity in recurring payment use cases and help to significantly reduce decline rates. 

Network tokenization also helps enforce domain restrictions, meaning a token created for one merchant cannot be reused for another merchant. This merchant-specific token mapping dramatically enhances payment security and guards against fraud even in cases where a criminal obtains the token. 

Card tokenization creates seamless and trustworthy payment experiences for customers that can help build both loyalty and revenue for your business. A strong tokenization strategy can enable:

• Secure card-on-file billing
• Reduced fraud exposure
• Faster checkout experiences
• Higher authorization rates (especially with network tokens)
• Simplified PCI compliance scope

As we’ll discuss in the next session, merchants have more than one option for how they can connect to a card processing network. The same can be said for tokenization. You have options. 

Card networks have started offering their own token services, but you can also opt for something like an open payments platform that will allow you to integrate multiple network tokens into one central system. At Spreedly, for example, our platform offers advanced vaulting capabilities that include network tokenization and automatic updating features. 

Get Ahead Of Card Tokenization Failures

Card tokenization plays a critical role in ensuring the security and efficiency of digital transactions today. While the process faces its share of challenges, these can be effectively managed and mitigated with the right approach and technology. Spreedly offers a comprehensive solution that addresses the key aspects of tokenization — from adaptive transaction handling and robust security measures to efficient card lifecycle management. By choosing Spreedly, businesses can navigate the complexities of card tokenization with confidence, minimizing failures and enhancing the overall transaction experience.

Don’t let tokenization challenges impact your businesses revenue. See why Spreedly has the right tools and knowledge to enable tokenized transactions.

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