Tokenization, as the name suggests, is a process that converts sensitive data into tokens. These tokens usually don’t have much meaning outside the department in which they were created. Incorporate world, merchants as well as people use credit cards to make transactions. Credit card tokenization refers to the process where the credit card’s sensitive data is translated into tokens, which do not have extrinsic meaning.
How Does Tokenization Works?
Imagine going to a restaurant. You submitted your credit card to the cashier at the billing station, who enters the payment details into the form. Or you swiped the card through the card reading device. The chances are that this vital information stays in that system for long, making it easier for the hackers to steal. However, if the merchant is using token cards, things will turn out differently. The system will store your credit card information in the form of meaningless tokens. For example, if your credit card says Jennifer Davis, 2001 2356 1976 1017, expiration data 3/2021, the token will look like EX52371MKLP. This token will be utterly useless to the cybercriminals.
What Are the Benefits of Tokenization?
Businesses all around the globe are moving towards tokenizing credit card information. Here are the reasons why:
Safety and Security:
Tokenization guarantees you the safety and security of the data. As the customer leaves your counter, your system never really saves the information. Instead, it replaces it with random numbers, which keeps the data more secure.
Fewer Cybercrimes:
Let’s suppose that the hackers got their hands on the merchant’s system. They extract the data from your computer but only got a random set of numbers and letters, which are meaningless. There is no credit card tokenization algorithm that can help to extract the data. The only way to get this information is to access the vault in which they are saved. It makes it virtually impossible for criminals to misuse the data. Not only the criminals, but your staff members will not be able to mishandle the data.
Cost-effective Method:
It is cost-effective in many ways. The system doesn’t have to save much data. Cybercrimes stay in control, keeping the energy and money to form new cards and new accounts for the customers (which were mandatory if someone hacks their data). It helps in saving deposits using a high-tech security system.
Secure Card not Present Transactions:
Online shopping is the most trending buying stuff in today’s time. Card not present transactions (CNP transactions) have always haunted the customers. There was always a way to breach the data that could be mishandled. Thankfully, tokenization ends every possible way that can harm the cardholders. It makes online payments a secure pavement for the clients. Hackers will not trace the website or service information since it contains a mere set of random letters.
Marketing Benefits:
You will be attracting happy customers towards you. It will grant you peace and satisfaction as you don’t keep worrying about the consumer’s data. Tokenization is a ladder to a safe and successful business, indeed.
Difference Between Tokenization and Encryption:
Encryption and Tokenization are two essential means for data security. End-to-end encryption is applicable at various platforms such as VPNs, WhatsApp, etc.
Encryption is a process that encrypts the customer’s data into unreadable data. The system scrambles the data using algorithms and saves the long-term information, which can be accessed only when it is key. Naturally, criminals do not have access to the private key, which helps in decoding the information. But the data remains safe in the internal system of the company. However, if criminals access the encrypted files, it can be decrypted by applying correct algorithms and math calculation.
On the other side, if a system uses tokenization, the information will not be saved. Instead, random digits are used to identify the consumers. These tokens don’t mean anything outside the system.
Where Does the Tokenization Applicable? Who Provides Credit Card Tokenization Services?
Mobile Wallets (Apple and Android):
Suppose you dial the information on Apple wallet or Android wallet by clicking a picture or manually adding the details. These wallets will send this data to the card-issuing bank. This bank will randomly generate a token for you, which is sent back to the wallets. These wallets then use this token to recognize you, and it is only applicable when you are operating them.
Recurrent Payments:
When you have made a subscription on a site or web for a more extended period, they save your account details in the form of tokens.
E-commerce Site:
If you are buying something from a site that you operate regularly, it might give you a chance to check out with a click. The website saves your acco