Network tokenization for banks: how tokens work, what issuers must do, and what agentic commerce adds

What is a network token, and how is it different from a card number or a merchant token?

A network token is a substitute card number issued by the card network, linked to the real card number (the primary account number, or PAN) and usable only in one place: one phone, one merchant, one checkout service or one AI agent. EMVCo, the standards body the networks own, says EMV Payment Tokenisation removes “the most valuable data to a fraudster, the primary account number (PAN)” and replaces it with “a unique alternative value” that “is constrained in how it can be used. For example, to a specific merchant, device or payment scenario.” Visa's FY2025 10-K describes its version the same way: the Visa Token Service (VTS) replaces “16-digit Visa account numbers with a token that includes a surrogate account number, cryptographic information and other data to protect the underlying account information.” Mastercard runs the equivalent service as the Mastercard Digital Enablement Service (MDES).

The distinction that matters for a bank is between network tokens and the tokens merchants and payment processors already used. Mastercard's April 2026 white paper on network tokenization sets it out: a payment service provider (PSP) token is generated by the PSP for one merchant, is “not sent to the issuer during payment authorization”, and is swapped back to the funding PAN before the card reaches the bank. A network token is issued by the network, travels the whole payment flow to the issuer, carries a one-time cryptogram on customer-initiated payments, and comes with lifecycle management, so it keeps working when the card is reissued. The two are often combined: merchants “will often retain a PSP token which is mapped by the provider to a network token”. The issuer only ever sees, and only ever approves, the network token.

This page is about the infrastructure. For how small businesses adopt tokenized, virtual and wallet-first cards, and the networks' SME programs, see SME cards and tokenization; for how the four-party networks work with banks generally, see payment networks and bank partnerships.

Who does what in network tokenization, and what must the issuing bank do?

EMVCo's Technical Framework defines the roles; the networks' rulebooks turn them into obligations. A token requestor (a wallet such as Apple Pay, a merchant or PSP storing cards, a Click to Pay service or, now, an AI agent platform) asks for a token. The token service provider (VTS, MDES, or the American Express Token Service) creates it, keeps the vault and checks every use. The issuer decides whether the token is created, verifies the cardholder, and authorizes each payment. Acquirers and processors must carry the token and its data elements through. Visa's rule on issuer participation is explicit: an issuer using VTS “assumes full responsibility” for validating cardholder identity, “provisioning and maintenance decisions for Tokens”, compliance with terms and conditions, and “performing credential updates associated with Tokens and their underlying Payment Credentials” (Visa Core Rules and Visa Product and Service Rules, 18 April 2026 edition).

The Visa rulebook's token requirements by region (April 2026 edition)

Visa publishes its rules; Mastercard does not publish an equivalent public rulebook section on MDES issuer obligations, so the table below covers Visa only. Visa distinguishes a “Visa Token Service Active Issuer Participant” (the issuer runs its own token decisions) from a “Basic” participant, which Visa enrolls for card-absent transactions and, in several regions, for which Visa manages credential updates if the issuer does not. The approval rate in the table is defined in the rules as “the number of successful Token provisioning requests as a percentage of all eligible Token provisioning requests processed.”

Two further rules shape what a bank can do with tokens. First, card art: an issuer “must provide Visa with its Card artwork” and consent to Visa sharing it with third-party wallet token requestors, stored-credential token requestors, agentic payment provider token requestors and, from 25 July 2026, third parties using Click to Pay; if it does not, Visa supplies default art. Second, data: unless it has a bilateral agreement with the token requestor, an issuer may use token requestor data only for fraud prevention, token provisioning (“Issuer identification and verification [ID&V]”), transaction decisioning, customer service and operations, and “must not ... Use Visa Token Service data elements for underwriting or marketing purposes, or disclose these elements to any third party.” Device and requestor signals from tokens are for risk decisions, not for credit models or cross-selling.

How do the payment account reference, cryptograms and lifecycle updates work?

Payment account reference (PAR). Because one card can have dozens of tokens, merchants, transit operators and fraud teams need a way to recognize the same account without seeing the PAN. EMVCo describes PAR as “a way to link transactions that use EMV Payment Tokens with the Primary Account Number (PAN)”; in January 2026 it said it is enhancing the PAR data element in the Technical Framework to handle cases such as co-badged cards online and to support “increased adoption of PAR across the ecosystem”, and its April 2026 board update listed that work for the Singapore technical meeting. The Visa rules make PAR universal and restrict it: “A Visa payment account must have an associated Payment Account Reference”; acquirers must be able to deliver PAR to merchants; and acquirers and agentic payment enablers must ensure a PAR is not stored with the full credential, that “a Transaction is not initiated with a PAR”, and that it is used only for customer service, fraud and risk control, opted-in value-added services and legal compliance.

Cryptograms and domain controls. Mastercard's white paper explains that tokenized cardholder-initiated transactions “include a one-time cryptogram, which dynamically validates each transaction”, and that network tokens are “domain-bound”, so a stolen token is of little use outside its merchant or wallet. The PCI Security Standards Council relies on exactly those controls: its FAQ 1326 says payment tokens “must be used in conjunction with a dynamic token cryptogram and/or other sufficient domain controls”.

Lifecycle management. This is where the issuer's work shows up in merchants' revenue. When a card expires or is replaced after fraud, “the network then updates all associated tokens automatically”, Mastercard says, but only “when issuers provide lifecycle management updates on the underlying cards”; it asks issuers to send new expiry dates and reissued PANs through MDES and its Automatic Billing Updater (ABU), which passes account changes to merchants holding stored credentials. Visa writes the same duty into its rules: in every region a participating issuer must ensure a token reflects “the most up-to-date underlying Account Number” and expiry date. A bank that reissues cards without pushing the update to the token service produces the declines, churned subscriptions and call-center traffic that tokens were meant to remove.

What do Visa and Mastercard disclose about token volumes, approval rates and fraud?

Both networks publish adoption and performance figures, always from their own data and usually without method detail. The table collects them with their dates. Read the approval numbers carefully: Visa's June 2024 release reported a “six-basis point increase in payment approval rates globally” from tokenization, while Mastercard says tokenization grows approvals “by 3-6 percentage points across regions” (November 2024) or a “potential 3-6 percentage-point improvement in approvals on average” (April 2026). The two are not measured the same way, and neither release says what base or transaction mix it uses, so they should not be compared head to head.

The trend line is clear even with mismatched definitions: Visa went from 10 billion tokens (June 2024) to more than 17.5 billion (January 2026), and Mastercard from a quarter of e-commerce transactions (June 2024) to more than half (April 2026). PYMNTS reported that Mastercard's second-quarter 2026 earnings materials showed token penetration above 40%. The Checkout.com figures are one acquirer's portfolio, published by Mastercard in a co-branded paper, not an industry average.

What is not on the record: neither network publishes token approval or fraud figures by issuer, issuers do not report their own tokenized share, and no US bank we track discloses its token provisioning approval rate, even though Visa's rules set a 90% floor for active participants. No regulator publishes fraud rates for tokenized versus untokenized card-not-present payments. For the fraud models that sit on top of tokens, see AI fraud detection.

How do Click to Pay and payment passkeys build on tokens?

A token removes the card number; it does not prove the person paying is the cardholder. The networks pair tokens with two other pieces. Click to Pay is the networks' tokenized guest checkout: Visa's 10-K says it removes “time-consuming key entry” at checkout, and Mastercard calls it “a one-click checkout solution”. Payment passkeys add device biometrics under FIDO standards. Visa launched the Visa Payment Passkey Service on 15 May 2024, saying it “confirms a consumer's identity and authorizes online payments with a quick scan of their biometrics”, deployed it first inside Click to Pay, and said it would partner with issuers to enable both on new cards “from the moment the card arrives”. Its FY2025 10-K adds that Visa Payment Passkey “links the token to the consumer's device passkey information”.

Mastercard set the deadline. On 11 June 2024 it committed to 100% e-commerce tokenization in Europe by 2030, and on 13 November 2024 it extended the goal worldwide: by 2030 it aims “to eliminate the need for manual card entry and one-time or static passwords” and to ensure “every online transaction across its network can be tokenized and authenticated”. The same release named issuers enrolling card portfolios in Click to Pay (Commonwealth Bank of Australia, ING Spain, NatWest, Santander Mexico) and Axis Bank among deployers of the Payment Passkey Service. By 1 June 2026, Click to Pay was available in 32 European markets with enrolments more than doubling and returning customers over 70% of checkouts; NatWest and Tatra Banka were named as new tokenization partners and Capital One UK, Santander UK and Qonto among new Click to Pay partners.

• Token service: Visa Token Service, the Visa Cloud Token Framework and Token Management Service for sellers and acquirers; Mastercard MDES and Secure Card on File. The issuer supplies BIN enablement, ID&V decisions, lifecycle updates and card art.
• Checkout: Click to Pay at both networks. The issuer enrolls its portfolio so cardholders appear without typing a number.
• Authentication: Visa Payment Passkey Service (May 2024); Mastercard Payment Passkey Service and Identity Check (3DS). The issuer offers passkey enrolment in its app and steps up when risk is high.

The fraud has moved accordingly. Visa said in December 2023 that fraudsters “use social engineering and other scams to illegitimately provision tokens”, putting 2022 losses at about $450 million, and launched Visa Provisioning Intelligence, a machine-learning score from 1 to 99 delivered to issuers for each provisioning request. The attack surface for a tokenized card is the moment the token is created, which is why the EU has now written authentication at that moment into law (see below).

What does token-based agentic commerce ask of banks?

Both networks built their AI-agent payment programs on tokens, which means agentic commerce reaches banks as a token provisioning request. Mastercard launched Agent Pay on 29 April 2025 with “Mastercard Agentic Tokens” that build on the tokenization behind contactless, card-on-file and passkeys; agents must be “registered and verified”, and “every player in the value chain, from consumers to issuers and merchants, will be able to recognize the transactions that are facilitated by intelligent agents”. For banks, Mastercard said, tokenized credentials would keep “card issuers at the forefront ... with enhanced visibility, security, and control.” Visa announced Visa Intelligent Commerce the next day, offering “AI-ready cards” that replace card details “with tokenized digital credentials” and confirm “that a consumer's chosen agent is allowed to act on a consumer's behalf”; its 10-K says it “deployed a pilot program that processed live agentic token transactions” in 2025.

Visa's April 2026 rules are the most concrete statement of what agentic commerce requires. An agentic payment provider must enroll in Visa Intelligent Commerce and register with Visa, obtain cardholder consent to provision a token and to use “the Cardholder-defined payment instruction”, state when that instruction expires, verify the cardholder's identity before storing a credential, use only the cardholder-defined criteria when buying, and, for stored credentials, “obtain a Token directly from Visa”. It may not run agentic transactions in a card-present environment or aggregate several agentic transactions into one. The provider must keep the cardholder agreement and give it “to the Cardholder or Issuer upon written request”, which is the record a bank will need when a customer disputes something their agent bought.

For the issuing bank, that adds up to four jobs: approve or decline agent token requests with the same ID&V discipline as wallet tokens; make passkey or in-app authentication available, since Mastercard's European transactions used passkeys; feed the new agent flags and token assurance signals into authorization; and set dispute handling for agent purchases. EMVCo formed an Agentic Payments Task Force (April 2026) to examine “consumer intent, trust in agent-initiated transactions and privacy-preserving interaction models” across 3DS, tokenization and Secure Remote Commerce, so the technical standard is still being written. Neither network has published agentic payment volumes. Banks named in pilots are listed on the network partnerships page and in agentic banking.

Which rules govern tokens: PCI DSS, Section 1033 and the EU Payment Services Regulation?

Three regimes touch tokens directly, and none of them mandates network tokenization outright; the mandates that exist come from network rules and, in some markets, central banks. What the public rules do is shrink compliance scope for token users, allow tokens in open banking, and, in the EU, require authentication when a token is created.

PCI DSS. The scope relief is the commercial argument merchants hear most, but it applies to the merchant's token-only systems. The FAQ is explicit that “PCI DSS still applies anywhere Account Data is stored, processed, or transmitted”, and an issuer, which holds the PANs, gets no relief for its own environment. Visa's agentic rules also require agentic payment enablers to comply with PCI DSS.

Section 1033. The 1033 tokens are bank-account tokens (tokenized account and routing numbers for pay-by-bank), not card tokens, but the logic is the same: the CFPB finalized an example allowing a data provider to share a tokenized account number, noted that doing so is optional, and recorded comments from third parties that tokens could be used anticompetitively. With compliance dates stayed and a reconsideration proposal pending (see open finance explained), nothing obliges a US bank to tokenize account numbers today, but the 2024 text shows where supervisors would draw the line.

PSD3 and the PSR. The final compromise text says there is “no consistent understanding” across member states of the SCA requirements for enrolling cards in digital wallets, and that token creation “may give rise to a risk of payment fraud”; the payer's PSP must therefore apply SCA at issuance or replacement of the token and “associate the user and the digitised version of the payment instrument with the respective device.” For an EU issuer, that turns token ID&V from a network rule into a legal obligation, and it applies to agent tokens created remotely as much as to phone wallets.

What should a bank do about network tokenization in 2026?

The direct answer: treat tokens as the default card credential for every digital channel and measure them like a product, because the networks have set 2030 as the date manual card entry ends and agentic commerce arrives as token requests. The list below is built from the obligations and figures above; each item maps to a rule or a disclosed metric.

• Enable every BIN for card-absent tokens. Visa already requires it for active participants in every region; include commercial and prepaid ranges, since Mastercard's Agent Pay examples include a virtual corporate card token.
• Measure the provisioning approval rate per BIN. Visa's floor is 90% a month for active participants. Report it alongside provisioning fraud, which Visa put at about $450 million globally in 2022, so the two are managed together rather than traded off blindly.
• Automate lifecycle updates. Send every reissue and expiry to VTS and MDES (and ABU) the day it happens; a token that still points to a closed card is a decline the merchant blames on the bank.
• Use the network risk signals. Visa Provisioning Intelligence at ID&V; the token assurance signal and agent flags at authorization. Keep token requestor data inside fraud and operations: Visa's rules bar its use for underwriting or marketing.
• Enroll portfolios in Click to Pay and offer passkeys in the app. Mastercard's European agentic transactions were passkey-authenticated, and the EU PSR will require SCA at remote token creation.
• Supply card art and keep it current. Visa shares it with wallets, card-on-file merchants, agent providers and, from 25 July 2026, Click to Pay; without it, cardholders see default art and may not recognize the card.
• Write the agent dispute playbook. Decide how agent-flagged transactions are authorized and disputed, and use the Visa rule that lets an issuer request the cardholder's agent agreement in writing.
• Show customers their tokens. A view in the banking app of which merchants, devices and agents hold a token, with the ability to revoke one without reissuing the card, is the control that makes agent payments acceptable to customers.

Banks that disclose tokenization metrics publicly remain rare, so the best public benchmarks are the networks' own: Visa's nearly 60% of global e-commerce tokenized (fiscal Q3 2026) and Mastercard's three in five in Europe (June 2026). A bank below those shares on its own e-commerce volume is behind its network. Profiles of the networks are at Visa and Mastercard.

1. EMV Payment Tokenisation — EMVCo, Jul 11, 2022 (emvco.com)
2. Enabling Seamless and Secure Payments in 2026 — EMVCo, Jan 30, 2026 (emvco.com)
3. Agentic Payments and Digital Payment Credentials: Highlights from the EMVCo Board of Advisors Meeting — EMVCo, Apr 10, 2026 (emvco.com)
4. Visa Core Rules and Visa Product and Service Rules (18 April 2026 edition) — Visa, Apr 18, 2026 (usa.visa.com)
5. Visa Inc. Annual Report on Form 10-K for fiscal 2025 — Visa Inc. via SEC EDGAR, Nov 6, 2025 (sec.gov)
6. Mastercard Incorporated Annual Report on Form 10-K for 2025 — Mastercard via SEC EDGAR, Feb 11, 2026 (sec.gov)
7. Visa Issues 10 Billionth Token, Generating $40 Billion in Incremental E-commerce Globally — Visa, Jun 4, 2024 (usa.visa.com)
8. Visa Provisioning Intelligence Launches to Combat Token Fraud — Visa, Dec 13, 2023 (usa.visa.com)
9. Visa Reinvents the Card, Unveils New Products for Digital Age (Visa Payment Passkey Service) — Visa, May 15, 2024 (usa.visa.com)
10. The Future is Here: Visa Announces New Era of Commerce Featuring AI — Visa, Apr 30, 2025 (usa.visa.com)
11. Visa Intelligent Commerce: product drop announcement — Visa, Apr 30, 2025 (corporate.visa.com)
12. Visa Introduces Trusted Agent Protocol: An Ecosystem-Led Framework for AI Commerce — Visa, Oct 14, 2025 (usa.visa.com)
13. Visa and Partners Complete Secure AI Transactions, Setting the Stage for Mainstream Adoption in 2026 — Visa, Dec 18, 2025 (usa.visa.com)
14. Visa Announces New AI, Stablecoin and Token Innovations to Power Intelligent, Programmable Commerce at Visa Payments Forum — Visa, Jun 10, 2026 (usa.visa.com)
15. Mastercard reimagines online checkout; commits to reaching 100% e-commerce tokenization by 2030 in Europe — Mastercard, Jun 11, 2024 (mastercard.com)
16. Mastercard reinvents checkout with password and number free payments — Mastercard, Nov 13, 2024 (mastercard.com)
17. Mastercard unveils Agent Pay, pioneering agentic payments technology to power commerce in the age of AI — Mastercard, Apr 29, 2025 (mastercard.com)
18. Making agentic AI commerce a reality with embedded, trusted payments — Mastercard, Sep 30, 2025 (mastercard.com)
19. Network tokenization: powering the e-commerce of today and tomorrow (white paper, April 2026) — Mastercard, Apr 1, 2026 (mastercard.com)
20. Mastercard Advances Europe's Checkout Transformation on the Road to 2030 — Mastercard, Jun 1, 2026 (mastercard.com)
21. Europe is Building the Foundations for Trusted Agentic Commerce — Mastercard, Jun 2, 2026 (newsroom.mastercard.com)
22. Visa CEO Says Company Now a Payments 'Hyperscaler' — PYMNTS, Oct 29, 2025 (pymnts.com)
23. Visa Credentials Soar as Payments Hyperscaler Eyes Agentic Commerce — PYMNTS, Jan 30, 2026 (pymnts.com)
24. Card Networks Push Beyond Payments to Lock In Growth — PYMNTS, Aug 3, 2026 (pymnts.com)
25. How does PCI DSS apply to EMVCo Payment Tokens? (FAQ 1326) — PCI Security Standards Council, May 1, 2015 (pcisecuritystandards.org)
26. Required Rulemaking on Personal Financial Data Rights (final rule, 89 FR 90838) — Federal Register, Nov 18, 2024 (federalregister.gov)
27. Personal financial data rights: compliance resources (compliance dates stayed) — Consumer Financial Protection Bureau, Oct 29, 2025 (consumerfinance.gov)
28. Proposal for a Regulation on payment services in the internal market: confirmation of the final compromise text (8221/26) — Council of the European Union, Apr 17, 2026 (data.consilium.europa.eu)