PSP tokens vs. Network tokens: What your business needs to know

As payment security becomes more critical, businesses are increasingly adopting tokenization to safeguard sensitive data. 

Two common types of tokens are PSP tokens and network tokens. While both serve the same core function—protecting cardholder data—they operate in different ways, with distinct implications for merchants.

Juniper Research forecasts tokenized transactions will exceed $574 billion globally by 2029. Tokenization replaces card details with non-sensitive tokens, making digital transactions safer and more efficient.

In this article, we’ll break down the differences between PSP and network tokens, the pros and cons of each, and how to choose the right approach for your payments strategy.

What is a PSP token?

A PSP token is created and managed by a payment service provider (PSP), such as Stripe, Adyen, or Braintree. It replaces the customer’s card data during transactions but is typically limited to that PSP’s environment.

Key characteristics:

• Token is merchant-specific and PSP-specific
• Cannot be transferred between PSPs
• Used to reduce PCI scope and improve security

This setup is convenient for merchants who don’t plan to change providers or need a fast integration. However, it creates vendor lock-in, making migration more difficult.

What is a network token?

A network token is issued by card networks such as Visa, Mastercard, or American Express. Unlike PSP tokens, network tokens are interoperable across different providers and channels.

Key characteristics:

• Managed by the card network
• Supports omnichannel and multi-provider use cases
• Includes lifecycle management (e.g., auto-updates for expired or reissued cards)

Network tokens improve payment performance, reduce fraud, and support digital wallets like Apple Pay and Google Pay.

Learn more about tokenization and vaulting in Gr4vy’s guide to secure card data storage.

PSP tokens vs. network tokens: A detailed comparison

Feature	PSP Tokens	Network Tokens
Ownership	Managed by PSP	Managed by card network
Interoperability	Locked to one PSP	Works across platforms and providers
Lifecycle updates	Manual updates required	Automatic updates (e.g., expired cards)
Vendor lock-in	High	Low
Use in digital wallets	Limited	Supported
Omnichannel support	Limited	Strong

Benefits of using PSP tokens

• Simple setup: Ideal for businesses with a single PSP and minimal development resources
• Faster time to market: PSPs handle token creation and management internally
• Reduces PCI DSS scope: By not storing card data, businesses lower their compliance burden

For businesses that want a quick solution and don’t anticipate switching PSPs, this model may be sufficient—at least in the short term.

Benefits of using network tokens

• Greater flexibility: Move between PSPs without losing token continuity
• Better authorization rates: Auto-updating tokens mean fewer declines due to expired or replaced cards
• Improved customer experience: Seamless payments across channels and fewer disruptions
• Enhanced security: Unique tokens per merchant, with cryptograms for every transaction

Many of these benefits tie directly into strategies that improve approval rates. For more, read our deep dive on payment approval rates.

Choosing the right token strategy

Your choice between PSP and network tokens should depend on your business model, transaction volume, and flexibility needs.

Choose PSP tokens if:

• You operate with a single PSP
• You’re looking for a fast, low-complexity solution
• You don’t expect to switch PSPs soon

Choose network tokens if:

• You want better control and portability
• You need multi-PSP or omnichannel support
• You’re focused on long-term security and scalability

Pairing network tokens with a payment orchestration platform gives you the infrastructure to manage multiple PSPs and routing rules with ease.

Why token portability matters for growing businesses

As companies expand into new markets or adopt new technologies, the ability to move payment data across systems becomes a major advantage. PSP tokens, while useful for isolated setups, limit this flexibility because they are tethered to a single provider.

By contrast, network tokens offer true portability. Businesses can migrate to new PSPs, integrate with different platforms, or test multiple providers—all without re-tokenizing customer data. This agility supports faster scaling and improves resilience when PSPs experience outages or performance issues.

If you’re planning global expansion or building a multi-PSP strategy, here’s how payment orchestration simplifies global payments.

The impact of tokenization on approval rates

Authorization rates are a crucial metric for any business that relies on recurring or card-on-file payments. Tokens play a significant role in maintaining these rates by preventing transaction failures due to expired or reissued cards.

Network tokens are especially powerful here. Because card networks manage them, they are automatically updated when a customer’s card is replaced or expires. This dramatically reduces soft declines and helps maintain a consistent cash flow.

In contrast, PSP tokens often rely on manual processes to update expired credentials, which can lead to higher failure rates unless the merchant takes proactive steps.

Tokenization and omnichannel commerce

For businesses operating across multiple channels—web, mobile, in-store—ensuring a consistent and secure payment experience is essential. PSP tokens, which are typically siloed within one provider’s system, may not support seamless cross-channel transactions.

Network tokens, however, are designed for omnichannel use. The same tokenized card credentials can be used securely across different touchpoints, including in-app payments, subscriptions, and even connected devices. This improves both customer experience and operational efficiency.

As more commerce shifts to mixed environments, network tokenization becomes key to offering a frictionless journey from screen to store.

Common misconceptions

1. Network tokens are more complex to implement. While they require a slightly longer integration process, many orchestration platforms simplify this by handling token requests and management in the background.

2. PSP tokens are more secure. Both token types offer enhanced security. However, network tokens often come with additional protections like domain control and transaction cryptograms.

3. You can’t use both. Many businesses benefit from using a hybrid strategy: PSP tokens for short-term operations and network tokens for long-term growth.

Both PSP and network tokens play a critical role in improving security and reducing PCI scope. However, network tokens offer a strategic advantage for businesses that want more flexibility, improved approval rates, and omnichannel readiness.

Frequently asked questions: PSP tokens vs. network tokens

What is a PSP token?

A PSP token is a payment token generated by a Payment Service Provider (PSP) to replace cardholder data. It’s typically only usable within the specific PSP’s system, meaning it can’t be transferred or reused with another provider.

What is a network token?

A network token is created and managed by a card network like Visa or Mastercard. Unlike PSP tokens, network tokens are interoperable, meaning they can be used across multiple payment service providers and platforms.

How do PSP and network tokens differ?

The primary difference lies in ownership and portability. PSP tokens are tied to one provider and offer limited flexibility, while network tokens are managed by card networks and are transferable across platforms.

Are network tokens more secure than PSP tokens?

Both token types improve security by replacing actual card data, but network tokens often come with additional protections, such as dynamic cryptograms and lifecycle management features like auto-updates for reissued cards.

Can I switch PSPs and keep my tokens?

Not with PSP tokens. Since they’re owned and managed by the PSP, switching providers typically means losing access to those tokens. Network tokens, however, are portable and can be used across providers.

Do network tokens help reduce transaction declines?

Yes. Because network tokens automatically update when a card expires or is replaced, they reduce the chances of declines due to outdated card details.

Can I use both PSP and network tokens?

Absolutely. Many businesses implement a hybrid strategy—using PSP tokens for short-term simplicity and network tokens for long-term flexibility and performance.

Are network tokens compatible with digital wallets?

Yes. Network tokens are essential for enabling secure transactions through digital wallets like Apple Pay and Google Pay, supporting tokenized credentials stored on user devices.

Is tokenization required for PCI compliance?

Tokenization is not mandatory but strongly recommended. It significantly reduces PCI DSS scope by eliminating the need to store or transmit sensitive card data.

How do I start using network tokens in my business?

Partnering with a payment orchestration provider like Gr4vy allows you to integrate network tokenization across all your PSPs and platforms efficiently.

To future-proof your payment infrastructure, combining network tokenization with payment orchestration ensures better performance, stronger security, and lower operational risk.

Want to talk about how to make this work for your stack? Contact Gr4vy today to learn more about tokenization, orchestration, and secure payment flows.