Payment Card Tokenization

Over 75% of worldwide data breaches occur in the United States each year, resulting in more than $3 million in lost information.

With the rise in fraudulent activity, businesses need to know how to protect customer information. Payment card tokenization can vastly improve business security.

What is Tokenization?

Credit card tokenization is a protection process that secures sensitive credit card data.

Tokenization takes credit card information and substitutes it with a unique token, which is only decipherable with the proper payment card tokenization system.

The token is completely different from the original credit card information, and acts as the key for all future transactions. Hackers cannot unlock the vault that houses your credit card data without this key, and even if they did, the information would be indecipherable.

Tokenization is being used more frequently by businesses because it is more secure and cost-effective than other methods, such as encryption.

How is Tokenization Different From Other Data Security Methods?

In the past, businesses have used a process called encryption to secure data.

Encryption simply rearranges data when a card is processed. Then, the data is decrypted back to its original form when the payment is authorized and reaches the merchant.

Unlike encryption, tokenization completely removes the credit card information from your network. Future transactions are completed with this unique token instead of the original credit card data.

Encryption only masks the original data, while tokenization transfers the information to a completely new, unrecognizable form that can only be read by your payment gateway software.

Why is Tokenization Important?

According to IBM Security, the average cost of a data breach hit $4 million, a 29% increase from 2013.  That is approximately $158 per lost or stolen record.

While the possibility of fraud exists, payment card tokenization keeps sensitive credit card data as safe as possible. Businesses can safeguard data against fraudulent activity by utilizing payment gateways that implement tokenization security.

If hackers attempt to break into a network, they can only see tokenized information, which holds no functional value to them. This security measure keeps data safe, and forces hackers to seek assets from alternate sources.

How Does Tokenization Secure Data?

Tokenization converts data to digital tokens that have no value outside of the tokenization system. The original credit card data is protected because it is no longer being used for payment transactions. Instead, the unique token is the vehicle that houses all important data. There is no way for hackers to distinguish between the original data and the tokenized information.

Where Does Tokenization Secure Data?

Many processors store data in a cloud-based virtual vault, which allows merchants to access the gateway in multiple locations. This permits greater functionality and continuous productivity.  Some processors store data on local servers, while others use an online backup service.

The Future of Tokenization

Tokenization is a growing technology, and can save businesses millions of dollars in fraud liability while shielding consumers from the hassle of dealing with data theft. Tokenization will be an essential player in the world of data security as physical credit card terminal technology has reached its threshold. It seems to be only a matter of time until tokenization gateways become the standard, and businesses would benefit greatly from taking advantage of payment card tokenization.

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