How Device Tokenization Is Shaping the Future of Payments? [Podcast Recap]

In the latest episode of What’s Cooking in the Payments Kitchen, PhonePe’s Ankit Gaur, Head of Payment Gateway & Online Merchants, and Praveen Kumathalli, Head of Product, Merchant Business, dive into one of the most transformative innovations in payments today: Device Tokenization.

Their conversation offers both clarity and foresight on how this technology is driving safer, faster, and more convenient digital transactions for both consumers and businesses.

From Merchant-Specific Tokens to Device-Based Experiences

Tokenization isn’t new but its latest form is a significant leap forward. As Praveen Kumathalli explained, traditional tokenization, known as Card-on-File Tokenization, allowed users to save their card details on specific merchant platforms for convenience and security.

“Let’s say I’m going to Swiggy to order food, instead of entering the card information again and again, that gets saved as a token, and my card information is still safe with the banks and the networks.”

Praveen Kumathalli

While this was a crucial security upgrade mandated by the RBI and card networks, it still locked the saved card to individual merchants. Device tokenization breaks that mould by allowing the card to be stored securely on the user’s phone itself, not tied to a single platform.

“Every time I use my phone to check out on any business, I don’t have to enter my card information. I can just pull a card from my phone and say ‘use it’.”

Praveen Kumathalli

The result is a portable, persistent, and platform-agnostic card experience that travels with the user streamlining digital commerce significantly.

More Than Convenience: Why It Matters for Businesses

Device tokenization isn’t just a consumer feature, it’s strategically valuable for merchants too. According to Ankit Gaur, one of the biggest wins is in checkout friction reduction.

“It reduces the number of hops that a customer has to make to complete a card payment. Reduced hops mean a faster, frictionless payment, and eventually leading to higher success rates.”

Ankit Gaur

This means higher conversion rates, better customer experience, and ultimately more revenue. Ankit also emphasized that merchants benefit from increased payment security, which translates to fewer chargebacks and disputes.

Furthermore, device tokenization doesn’t compete with existing card-on-file systems that merchants may already have in place.

“This is additive in nature and incremental, It’s in no way conflicting with the card base that the merchant might have already gotten from their customers.”

Ankit Gaur

Instead of displacing current methods, device tokenization complements them, expanding the range of checkout experiences merchants can offer.

A Collaborative Payments Ecosystem

Far from disrupting merchant control over payments, PhonePe views device tokenization as a means to enable clear role separation between merchants and payment platforms.

“We are entering a new era of collaboration. This allows merchants to focus purely on their customer journey and let payment players like us help get their checkout and payment experience much faster and better“

Ankit Gaur

This evolving model let’s merchants concentrate on product discovery and personalization, while infrastructure providers optimize checkout and compliance.

Praveen echoed this sentiment, calling it a “complementary solution” and reinforcing the idea that this is a cooperative shift, not a competitive one.

Not Without Trade-Offs

Despite its clear upside, device tokenization isn’t without its limitations. The first, Ankit noted, is that it’s inherently tied to mobile.

“Device tokens will only work on mobile phones. It will not work as a desktop solution.”

Ankit Gaur

In an increasingly mobile-first world, this may not seem critical but businesses with large desktop user bases need to be aware of the constraint.

Second, device tokens are bound to the specific hardware of a phone. So when users change phones, their card tokens don’t automatically transfer.

“If a consumer changes their device, they will have to retokenize the same cards.”

Ankit Gaur

This adds a step to the user journey during device transitions something businesses and platforms will need to address with clear UX.

Where It’s Headed Next

Looking ahead, both leaders view device tokenization as the stepping stone to a cardless and OTP-free future.

Praveen predicts that as consumers grow used to saving cards on their phones, the physical card will fade from relevance:

“The need for carrying the card all the time is going to be eliminated, and for physical store checkouts as well, device tokenization will pivot towards tap and pay.“

Praveen Kumathalli

In other words, the same saved token could soon work across online and offline touchpoints.

Meanwhile, Ankit sees a transformation in how transactions are authenticated.

“The way we are doing authentication today, which is through OTP, will go away, It will become as seamless as just using your fingerprint or your face.“

Ankit Gaur

This convergence of biometric identity and tokenized credentials could mean that payments will become nearly invisible happening in the background with a tap or a glance.

Final Take

Device tokenization isn’t just a security layer, it’s a platform-level shift in how digital payments function. As Ankit and Praveen made clear, it reduces friction, boosts trust, improves success rates, and prepares the ecosystem for what’s next.

And as adoption grows, it’s likely to redefine what consumers and merchants expect from a modern payment experience.

“It only adds to a merchant’s ability to make the entire checkout seamless, which is great. It doesn’t conflict. It is incremental in nature.“

Praveen Kumathalli

This is exactly the kind of evolution that powers the digital economy. If you’re an online business aiming to stay ahead in today’s competitive digital commerce landscape, get started with PhonePe Payment Gateway today.