Digital tokenization was first created by TrustCommerce in 2001 to help a client protect customer credit card information. Merchants were storing cardholder data on their own servers, which meant that anyone who had access to their servers could potentially view or take advantage of those customer credit card numbers.
TrustCommerce developed a system that replaced primary account numbers (PANs) with a randomized number called a token. This allowed merchants to store and reference tokens when accepting payments. TrustCommerce converted the tokens back to PANs and processed the payments using the original PANs. This isolated the risk to TrustCommerce, since merchants no longer had any actual PANs stored in their systems.