A new whitepaper from payment processor Silverflow suggests network tokenization can improve authorization rates by up to 6% while decreasing unnecessary churn.
Launched at MPE Berlin 2025, a European merchant payments conference, Exploring the power of network tokenization for the modern payments stack explores how merchants can upgrade from Card-on-File to Token-on-File and defines the difference between digital wallet tokens and Token-on-File tokens before giving actionable insights on optimizing a best-in-class recurring payments set-up.
“Network tokens are one of the most important parts of the modern payments system, and if your company is serious about making payments safer and less expensive, then they are a vital part of your payments stack,” said Silverflow product manager Erik Jongbloed. “If a merchant truly wants to create a best-in-class set-up, the combination and understanding of underlying transaction data, as well as your capabilities to act on these will be the icing on the cake to enable convenient, secure, and cost-effective transaction sequences.”
The payments ecosystem is moving away from cards and toward tokens. Recognizing this, Mastercard set a goal to ensure 100% of online transactions are tokenized and authenticated in Europe in 2030, and Visa has reported that around 30% of transactions processed over its systems are tokenized, with the potential for this number to grow to 70% towards the end of the decade.
Apple Pay, Google Pay, and Click To Pay are all examples of payment apps that use network tokens to offer cardholders a fast, frictionless check-out experience. Additionally, merchants and platforms are looking to shift from storing “card on file” to “token on file.”
Silverflow said tokenization offers merchants better security by encrypting sensitive cardholder data and higher revenue by reducing the impact of card lifecycle updates, enabling higher approval rates. Finally, acquirers and issuers see higher transaction authorization rates and lower fraud, increasing the overall level of performance and trust in the ecosystem.
Initially, tokenization systems were proprietary and limited in scope, with merchants relying on specific payment processors, creating walled gardens of tokens that lacked interoperability. This often led to inefficiencies and restricted merchants’ ability to optimize their payment systems. Today, network tokens are interoperable across platforms, gateways, and merchants.
“As digital payments evolve, tokenization will continue to play a pivotal role as emerging technologies integrate with tokenization to create even more secure and convenient payment methods,” said Silverflow co-founder and CEO Anne Willem de Vries. “The message for merchants and payment providers is clear: investing in tokenization is essential to meet growing consumer expectations for secure, seamless transactions.
“By adopting network tokenization and related innovations, businesses can future-proof their payment systems and build trust with their customers. This is because, in a rapidly digitizing world, tokenization isn’t just a security feature; it’s a major part of a new standard in payments.”