Tokenization Moves From Security Tool to Checkout Strategy

Watch more: The Digital Shift With Spreedly’s Doug Fry

The modern checkout page has become a proving ground where speed, trust and data quality determine whether a purchase succeeds or disappears. In short, getting as much value from payment information is a top priority.

It’s a job tailor-made for tokenization. For merchants, tokenization is no longer confined to protecting sensitive information. It is increasingly being used to improve payment performance, preserve customer relationships and make better use of transaction data.

Doug Fry, senior product manager at Spreedly, told PYMNTS that merchants should reconsider how they think about these stored payment credentials.

“When you come at it as just data that you’re obligated to protect, it’s really easy to fall into a trap of bucketing payment data as a cost of doing business,” Fry said. “Merchants should be thinking about it as an asset.”

An asset can be maintained, optimized and deployed to generate returns. In payments, those returns often appear as higher authorization rates, lower churn and smoother checkout experiences.

Checkout Depends on Better Data

Traditionally, merchants measured payment success by whether a transaction reached completion. Today, they increasingly focus on why transactions fail and what can be done to improve approval rates.

Fry said the answer often lies in information rather than infrastructure.

“When you’re in the payments business, you’re in the data business,” he said.

Network tokenization illustrates that principle. Merchant-specific tokens carry information that allows issuers to identify the business requesting authorization with greater confidence. That additional trust can improve approval decisions while giving merchants clearer visibility into the reasons transactions fail.

“The more data you have, the more data you send, the higher authorization rates that you will see,” Fry said.

Recurring payments present another example of tokenization’s expanding role.

Subscription merchants depend on stored credentials remaining valid over months or years. Expired cards, replacements after fraud events or account changes can interrupt billing and create involuntary customer churn.

“If you’re a recurring merchant, then tokenization is really the lifeblood, and your vault is the lifeblood of your business,” Fry said.

Modern token vaults can combine network tokens with account updater services to extend the usable life of credentials. In some cases, network tokens continue functioning even when underlying card details change, reducing interruptions without requiring customer action.

The result is that tokenization serves as an operational safeguard and a retention tool.

Merchant-Specific Tokens Reduce Friction

Fraud prevention remains central to the discussion, but Fry said tokenization’s value extends beyond security.

Because network tokens are tied to individual merchants, credentials stolen from one environment have limited value elsewhere. At the same time, tokenization can reduce reliance on customer-facing authentication steps that interrupt checkout.

“The fact that a network token is tied specifically to a merchant” provides inherent fraud benefits, Fry said.

Networks are also expanding the amount of information that can travel alongside tokenized transactions, allowing issuers to make more informed risk decisions while preserving a relatively seamless customer experience.

For merchants, the objective is not simply blocking fraud. It is balancing protection with conversion.

Owning Data Creates Flexibility

Tokenization also raises questions about ownership.

Fry advocated for independent, provider-agnostic token vaults that allow merchants to control payment credentials regardless of gateway relationships.

“When you own your data, you control your own destiny,” he said.

That independence can provide routing flexibility, commercial leverage and the ability to optimize providers as transaction volumes grow. A modest improvement in authorization rates or routing efficiency may have a limited impact for a small merchant but become financially meaningful at scale.

The same philosophy applies to compliance.

Maintaining PCI requirements internally becomes more challenging as threats evolve and standards change. Fry said he believes merchants should allow specialists to manage security while internal teams focus on customer experience and payment performance.

“Offloading that burden to someone who treats security as the core of their business allows you to then focus on the performance aspects of checkout,” he said.

Tokenization therefore occupies a broader role than it did even a few years ago. It remains a security technology, but it also supports authorization optimization, recurring revenue, merchant flexibility and data strategy. As checkout grows more competitive, those functions increasingly converge.

Watch the full interview with Doug Fry to hear more about:

Why merchants should view payment credentials as business assets rather than compliance obligations.

How merchant-specific network tokens can improve authorization rates while reducing checkout friction.

Why controlling transaction data and independent token vaults may become more important as payment choice expands.