What is Tokenization?
Tokenization refers to the process that converts sensitive data into data that is not sensitive which is called a token. A database or internal system can use it without bringing it into scope. This method is used to secure data that is sensitive and can be accomplished by replacing the original data with an unrelated value that has the same format and length. The tokens are then received and used by the internal systems of an organization. A secure token vault is used to store the original data. It differs from encrypted data in that tokenized data is rendered undecipherable and cannot be reversed. Since no mathematical relationship exists between a token and its original number, a token can’t be restored to its original form.
Purpose of Tokenization
Tokenization is meant to swap sensitive data with a random number that is in the same format but has no intrinsic value of its own. This is different from encryption. In encryption a number is changed mathematically but its original pattern is retained within the new code. This is known as format-preserving encryption. With the aid of tokenization, sensitive data is removed from one’s business system. This is done by replacing it with a token that is undecipherable and by storing the original data in a cloud data vault that is secure. Unlike encrypted numbers that can be decrypted with the appropriate key, tokens can’t be reversed as there is no mathematical relationship between the token and its original number.
In the context of banking, tokenization ensures the protection of the data of the cardholder. When a payment is processed by using the token that is stored in one’s system, then the original credit card tokenization system is the only one that can swap the token with the primary account number that corresponds to it and forward it to the payment processor for authorization. One’s system doesn’t record, transmit or store the primary account number. No technology can guarantee a 100% prevention of data breach but a cloud tokenization platform that has been built properly, aids in preventing the exposure of sensitive data in order to not let attackers capture any type of information that can be used by them for their profit.
The purpose of tokenization is to make it easier and more secure to accept payments. Moreover, it helps to create smooth payment experiences that result in enhanced customer satisfaction for businesses.
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Benefits of Tokenization
Tokenization, which substitutes a string of random numbers that are known as a token for private data, has many benefits. The first and foremost benefit is that it reduces the risk of data breaches. Hackers target to access vulnerable systems’ sensitive and confidential data, such as credit and debit card details. Tokenization ensures protection against the negative financial impact that results due to data theft. In this way, it aids in fostering trust among one’s customers by demonstrating commitment towards keeping the customers’ sensitive data safe. Moreover, tokenization makes it much easier to achieve as well as maintain compliance with the regulations of the industry. Any business that accepts payments through debit and credit cards needs to comply with the Payment Card Industry Data Security Standard (PCI DSS). PCI DSS aims at reducing sensitive data’s retention as well as governs its deletion and storage in a safe way. Tokenization meets this requirement as it never lets any sensitive information that is related to the cardholder be on one’s system. Another benefit is that payment innovations are driven by tokenization. With regard to making payments with devices safer as well as easier, this process addresses this essential requirement perfectly. As is evident, tokenization offers a plethora of benefits to e-commerce businesses with regard to data security, which makes it highly valuable.
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