Account Tokenization

Definition ∞ Account tokenization involves replacing sensitive financial data with a unique, non-sensitive digital identifier. This process converts confidential information, such as bank account numbers or payment card details, into a surrogate value. The token then facilitates transactions without directly exposing the original data. This method substantially improves data security and privacy within digital payment systems.
Context ∞ The adoption of account tokenization is increasing as financial institutions and payment processors seek to strengthen security protocols against data breaches. Discussions frequently address interoperability standards and the integration of tokenization across diverse payment networks. Future developments will likely involve wider application in decentralized finance for secure asset representation and transaction processing.