Network tokenization through the schemes connects merchants with issuing banks. This results in various advantages compared to PSP proprietary tokens. Instead of storing sensitive card data like card numbers (PANs) in their Card-on-File (CoF) systems, PSPs can store scheme tokens and significantly reduce liability. Scheme tokens are processed with EMV transaction cryptograms, which increases the security of payment transactions to a level similar to the security of a card present transaction. In addition, this increases approved transactions based on risk decisions.
Scheme tokenization sets the foundation for a PSD2 compliant delegated authentication enabling one-click checkouts in merchant apps.