Payment Tokenization Has Significant Benefits for Merchants and Retailers.
Payment tokenization is the process of securing online payments and safely processing them. It is an efficient solution to secure credit and debit card data at different points in the transaction life cycle. It greatly alleviates the risk of online payment processing for merchants and retailers.
When applied to data security, payment tokenization is the process of replacing of sensitive data with unique identification symbols that do not have exploitable meaning or value. As a result, sensitive data is replaced by a token or symbol to strengthen security of online transactions while simplifying validation efforts and complexity of compliance. Kind of like a casino chip. By itself it’s worthless but when linked to a casino, it can be worth millions.
Shifting Data Security Responsibility
As per Payment Card Industry (PCI) standards, credit card numbers cannot be stored on a merchants Point-Of-Sale terminal, eCommerce site, Virtual Terminal/Software Solution, etc., following a transaction. Merchants may either outsource their payment processing to a third party service provider that provides “tokenization options” or install end-to-end encryption systems.
By outsourcing payment processing, the third party service provider becomes responsible for issuing token values and keeping sensitive details of the cardholder locked down. As such, the service provider issues a driver for the transaction that converts credit card numbers into tokens, which contain only the last four credit card digits.
The correct implementation of tokenization can help improve security for cardholder data and reduce the scope of systems requiring PCI DSS compliance. Maintaining PCI DSS compliance across a range of devices is extremely costly and time consuming. A Visa or MasterCard approved payment tokenization service provider can help reduce PCI DSS compliance burden.
Tokenization vs Encryption
Security experts believe that tokenization offers better protection compared to high quality encryption, as there is a risk of breach associated with the latter if criminals or hackers(or technology terrorists) obtain encryption keys. Since tokenization doesn’t use encryption keys, you do not have to worry about managing cardholder data as the system is logically isolated from data processing systems that either process or store sensitive details replaced by tokens.
Payment Tokenization Makes Things Easy
Payment tokenization significantly increases security around payment card data without requiring any changes on the cardholder’s end. Tokenization is the process of preserving the value of credit or debit card data for service providers and merchants, which cannot be exploited or breached by criminals if compromised.
There is no need for a replacement card even if a merchants card details are breached, since their card details are replaced with a token, which is useless for criminals or hackers.
Tokenization for All Types of Data
The best thing about tokenization is that it is useful for securing all types of data, including electronic health records, driver’s license numbers, Social Security Numbers, prescriptions, and addresses. Tokenization can be used to secure sensitive data of all kinds, such as criminal records, medical records, bank transactions, loan applications, vehicle driver information, and voter registration. It can successfully mitigate the risk of identity theft and credit card fraud.
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