As businesses increasingly rely on digital data, the need for improved data security grows. And it is payment tokenization service providers that offer a secure way to store, manage, and process sensitive payment information nowadays. Tokenization can help reduce the risk of data breaches, minimize PCI compliance scope, and improve the security of online transactions.
But let’s start from the basics. What does tokenization mean in general? As we have already said, tokenization is a process that can help to improve data security and reduce audit scope. Tokenization replaces sensitive data with randomly generated numbers, or tokens, that have no intrinsic value. This process can help to protect businesses against fraud and data breaches. When used in conjunction with other security measures, tokenization can be an effective way to improve data security and reduce audit scope.
In the simplest of terms, a token is like a replacement key for your house. If the original house key is lost, you can use the token to get into your house. If a hacker steals your token, it does not give them access to your data. Tokenization is used to protect data at rest and in transit. Tokenization protects your data from unauthorized access by replacing sensitive data with a token that has no value or use outside of the application it was generated for. This token is referred to as a surrogate or representation of the original data. The tokenization process is typically transparent to your application. You do not need to change any code or assets in order to use it. You can use tokenization with files and data stored on your local device, on a cloud storage account, or even data that is already encrypted. Note: Tokenization does not protect your data from a security breach of an application that uses tokenization. Tokenization can only protect your data if the attacker does not have access to the encryption keys.
But how is tokenization different from encryption, then? Well, encryption (probably a more shared term) is a process that protects data, but it is not reversible. If the key is lost, then the data must be destroyed. At the same time, tokenization is a reversible process and, therefore, can be used to enable data sharing without exposing sensitive data. It means it is suitable for sufficient business tasks, credit card payment operations, etc., still being safe and reliable.
So, both methods are designed to make it more difficult for unauthorized users to gain access to sensitive information. The main difference between the two is their purpose. Encryption encrypts data to make it unreadable. Tokenization protects sensitive data by replacing it with a substitute value or token, which is stored in an encrypted format. Because the token has no value to an unauthorized party, it can be stored in an unencrypted format.
Among other basic benefits of tokenization are increased data security, increased agility and speed of data access, and reduced cost of compliance.
But we should introduce to you one more aspect – the PCI Data Security Standard (PCI DSS). It is a common set of requirements for organizations that handle credit card information. The standard was created to help organizations keep their customers’ credit card information safe from theft and fraud. The PCI Data Security Standard is required for all organizations that accept, process, or store credit card information. In general, the PCI Data Security Standard has 12 requirements that deal with topics such as access control, policies and procedures, security management, and incident response.
So, the PCI DSS requires organizations to protect cardholder data that is at rest, in use, and in transit. Tokenization protects sensitive payment card data from a breach due to the unauthorized use of payment cards by replacing the primary account number (PAN) with an alternative form of identification. The alternative form of identification is a random number or token, which is used to represent the PAN. Tokenization reduces PCI compliance scope, eliminates the need for PCI audits, and eliminates the need for encryption software and hardware.
But let’s return to more practical questions. Hopefully, we’ve made clear that when it comes to online payments, businesses are increasingly turning to tokenization as a way to protect their customer’s sensitive data. Because now credibility and safety are one of the most valuable things. But with so many different options available, how can you determine which type of tokenization solution is right for your business?
One important factor to consider is the type of data you need to protect. If you’re handling credit card information primarily, then a PCI-compliant solution is a must. But if you’re dealing with other types of data, such as customer addresses or Social Security numbers, then you’ll need to evaluate your options based on security and compliance needs.
Another key consideration is the level of security you require. Some businesses may be satisfied with a basic tokenization solution, while others will need a more robust option that includes features like encryption and multi-factor authentication.
How do you assess the security and compliance of the solution? Because when evaluating a tokenization provider, you need to know that its solution is secure, safe, and reliable. One of the most important things to consider is whether or not the provider meets your security and compliance needs. You also need to understand how they encrypt sensitive data, store it and access it. For example, if you are storing Social Security numbers, do they encrypt the information? What about the token? What happens if a token is compromised? Does it require multi-factor authentication to access the data? In order not to ask too many questions or have too many doubts, try choosing a reliable provider.
But there is one more topic we would like to cover in this article. When it comes to tokenization, there are two main options: self-managed tokenization and tokenization as a service. Both have their own advantages and disadvantages, so it’s important to choose the right option for your business. Here’s a look at the key differences between self-managed tokenization and tokenization as a service.
In self-managed tokenization, you manage the entire process yourself. The first step is to cleanse your data, which typically includes tokenizing the data and removing sensitive elements like Social Security numbers. Then you’ll need to store the tokenized data before you can use it in your applications. Finally, you’ll have to pay ongoing fees for the service and any potential fraud protection services that are associated with it.
In tokenization as a service, you don’t have to worry about any of the technical or infrastructure elements. Instead, you can focus on using your tokenized data in applications and leveraging new data sources that weren’t possible before. Here are some of the benefits you’ll realize with tokenization as a service: first is, of course, flexibility. You can use your tokenized data in applications that weren’t possible before, such as new mobile apps. Another positive aspect is visibility. You’ll have a better understanding of where your data is being used and how it’s being used. Scale is another benefit. You can use your tokenized data to reach new customers and sell targeted relevant ads.
When it comes to choosing a reversible tokenization solution, there are a few key things to keep in mind. First and foremost, you want to make sure that the solution you choose is compatible with the systems you’re using. Secondly, you need to consider the level of security that you require. And lastly, you want to be sure that the solution you select can scale as your needs grow. The future of reversible tokenization is bright. There are a number of benefits that businesses can realize by using this technology, and it’s not just limited to the e-commerce world. By all means, tokenization is a great way to protect sensitive data. If you haven’t yet switched to this method of protection, you should definitely consider it for your business.
We hope that this article will come in handy on your way to a new level of security and reliability. Good luck!