Tokenization is a method of protecting payment card information by substituting the card's number with a unique alphanumeric identifier, generated using proprietary algorithms. The unique identifier, or token, is then used for sending the transaction to the card's payment network, where it is decrypted and the transaction is authorized. The actual card number is stored in a secure vault (with the payment processor or bank), and does not reside on the merchant's or Samsung's systems.
Tokenization is being used to reduce security risks inherent in the collection and transfer of highly sensitive data between merchants and the card's payment network. Tokenized data is not mathematically reversible, and is useless unless you have the original key used to create the token, limiting the chance of your payment information being stolen or compromised.
The transaction is seamless and requires no changes on the part of the merchant or consumer.