Mastercard Tokenized 30% of Transactions in 2024 — Here’s Why It Matters
Mastercard has quietly been reshaping the financial world.
According to a new filing with the U.S. Securities and Exchange Commission (SEC), 30% of all Mastercard transactions in 2024 were tokenized. This shift marks one of the biggest real-world applications of blockchain technology by a major financial institution.
But what does this actually mean? And how does it work? Let’s break it down in simple terms.
What is Tokenization?
Tokenization is the process of replacing sensitive data — like credit card numbers — with unique digital tokens that can be securely used in transactions. Instead of storing or transmitting actual card details, a digital token takes its place, which is recorded on a blockchain.
Think of it like a movie ticket: Instead of carrying cash, you use a unique ticket (token) that lets you access the theater. The ticket itself has no value outside the cinema, making it useless if stolen. Similarly, Mastercard’s tokenization ensures that even if transaction data is compromised, it cannot be used by hackers.
Why Mastercard is Pushing Tokenization
Mastercard is not just experimenting with blockchain technology — it is fully embracing it. There are a few key reasons why the company is moving toward tokenized payments:
Traditional card transactions involve sending real credit card numbers, which can be stolen in data breaches. Tokenization removes this risk, making fraud much harder.
Tokenized payments are processed quicker since they eliminate the need for multiple authentication steps that slow down traditional transactions.
With fewer intermediaries in a transaction, Mastercard can save money and pass some of those savings onto banks and merchants.
Cryptocurrencies and stablecoins (like USDC or Tether) are offering cheaper, faster global transactions. Mastercard is using blockchain to ensure it stays relevant.
Governments worldwide are considering launching Central Bank Digital Currencies (CBDCs), which could change how money moves. Mastercard is preparing for a future where digital currencies dominate.
How Mastercard’s Tokenization Works
Mastercard has built a blockchain-powered system that integrates with banks, merchants, and digital wallets. Here’s how it works when you make a payment:
Mastercard has developed a blockchain-powered tokenization system that integrates with banks, merchants, and digital wallets to enhance payment security. Instead of exposing your actual card number, Mastercard replaces it with a unique token that can be used for transactions, reducing the risk of fraud.
When you register your card with a digital wallet (such as Apple Pay or Google Pay) or with a merchant, Mastercard generates a unique token that replaces your actual card details. This token is stored securely on your device or with the merchant, ensuring that your real card number is never shared during transactions.
During a purchase, the token is used instead of your actual card number. While the token remains the same for a specific card and merchant, each transaction includes a dynamic component, such as a one-time cryptogram, which adds an extra layer of security. This means that even if a hacker intercepts transaction data, they cannot reuse the cryptogram for fraudulent transactions.
Once the transaction is initiated, the merchant and bank verify the token and its accompanying cryptogram with Mastercard. If both are valid, the transaction is approved, and funds are transferred as usual. This process ensures that sensitive card details are never exposed, making digital payments safer and more secure.
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Mastercard vs. Crypto Payments
While Mastercard’s tokenization is a big step toward blockchain adoption, it is different from cryptocurrencies.
Crypto transactions are decentralized, meaning they don’t rely on banks or companies like Mastercard. Mastercard’s tokenization still involves banks, making it a more controlled and regulated system.
Stablecoins like USDC already use tokenization, but they exist on public blockchains, while Mastercard’s system is private.
However, Mastercard is not ignoring crypto. The company has hinted that it may integrate stablecoins and even help governments build CBDCs on its network.
With more businesses and consumers moving to digital payments, Mastercard’s shift to tokenization is a strategic move.
The company is also investing in blockchain patents, ensuring that it can develop future products that integrate cryptocurrencies and decentralized finance (DeFi). In addition, Mastercard has developed tools that allow governments to tokenize CBDCs across multiple blockchain networks, giving it a powerful role in shaping the future of money.
What’s Next?
More tokenized transactions — Mastercard is expected to increase its tokenized payment percentage beyond 30% in 2025.
The company may allow merchants to accept payments in crypto-backed stablecoins.
Mastercard could move into blockchain-based lending, digital identity verification, and NFT-powered payment systems.
Challenges Slowing Down Adoption
While tokenization offers many benefits, it isn’t perfect. There are still several roadblocks that could slow down Mastercard’s expansion of tokenized payments:
Not all businesses accept tokenized payments yet. Many retailers and payment processors still use older systems that aren’t compatible with Mastercard’s tokenization technology. Upgrading these systems is costly and takes time.
Many people don’t understand tokenization or why it’s more secure. Since tokenized transactions look the same to consumers, people may not see the immediate benefit — making it harder for Mastercard to convince users to adopt it.
Governments aren’t moving at the same speed as tech companies. While Mastercard is investing in blockchain-powered payments, some regulations still favor traditional banking infrastructure. If laws restrict tokenized payments, it could slow down adoption.
Mastercard’s tokenization still relies on banks and centralized payment networks. Meanwhile, cryptocurrencies and decentralized finance (DeFi) platforms allow people to make payments without needing a bank at all. If crypto adoption grows faster than Mastercard’s technology, traditional payment networks could struggle to keep up.
While tokenization prevents traditional fraud, it introduces new risks. Hackers could target the token generation process or exploit weaknesses in blockchain security. Mastercard needs to continuously improve its security measures to stay ahead of cybercriminals.
TokenFi’s RWA Tokenization Module
TokenFi wants to make tokenization easy for everyone — not just large companies or tech experts.
With its upcoming RWA Tokenization Module, TokenFi will allow anyone to turn real-world assets like property, businesses, or creative projects into digital tokens. No coding or blockchain knowledge is needed — just a few clicks, and the asset is tokenized.
The platform is designed to be as simple as setting up an online account, ensuring a hassle-free experience while staying fully compliant with regulations.
