Method and system for performance enhanced hierarchical key distribution system

A system for secure digital payment transactions, comprising:

• a client terminal processor device;
• and
• a transaction server, wherein the client terminal processor device communicates with the transaction server, and wherein the client terminal processor device processes computer-readable instructions to effect a client initialization process, including causing the client terminal processor device to:
• send a token request packet from the client terminal processor device to the transaction server, wherein the token request packet requests an encrypted token key;
• wherein the transaction server is further operable to:
• in response to receiving the token request packet, generate the encrypted token key by the transaction server using a secret token key (STK) residing in an associated master derivation key (MDK), wherein the STK is concatenated with a custom token string (CTOK), the client terminal processor device unique identity string (DID), an implementation name, and a token request counter to make a concatenated array;
• utilize the concatenated array to generate a separate PRF key;
• generate a transaction key cache based on the PRF key;
• and
• erase the encrypted token key.