Payment information protection in the current digital economy scenario is more critical than ever. According to a recent report, payment fraud in the UK has increased enormously, with the annual loss being staggering £3 billion (eight times more than estimated previously). The danger of this trend creates the need for businesses and consumers to put in place strong measures to protect themselves from ever-increasingly smart scams. This article will discuss why tokenization is the new way to ensure your payment info remains safe at all times.
What is Tokenization?
Tokenization is a data protection mechanism that replaces sensitive data, for example, credit card numbers, with a unique non-sensitive identifier, referred to as a token. These tokens bear no valuable exploitable information and would not be reverse-engineered without access to a secure token vault. With this approach, any and all payment information remains protected even in the case of a data breach, thus ensuring you make transactions peacefully.
How Tokenization Works
If a customer starts a payment, their sensitive data travels to a tokenization system. This system produces a token – a random collection of characters – which identifies the original data. The token is then used in lieu of the real payment information in transaction processing. The real information is safely saved in the different database, in an encrypted manner, and is available only for authorized systems. The access to these authorized systems is entrusted to a select few and remains highly confidential.
Benefits of Tokenization
There are multiple benefits of tokenization, each explained below:
- Enhanced Security: Through replacement of sensitive data with tokens, data breaches can be prevented by a great margin. As long as there is no matching secure database, even intercepted tokens are useless.
- Regulatory Compliance: For businesses to be regulated by data protection rules such as PCI DSS, tokenization helps reduce the storage of sensitive information, thus making business processes more efficient.
- Operational Efficiency: Tokens may be converted to follow the format of the original data, meaning existing systems can process transactions with minimum modifications and higher efficiency.
- Customer Trust: Strong security measures such as tokenization increase the customers’ confidence on their data being handled by a given business.
Tokenization vs. Encryption
Though both tokenization and encryption are data security means, the way tokenization and encryption work is different. Encryption changes data’s readable format into a coded form; easily decrypted using the right key. Tokenization, on the other hand, replaces data with a token and stores the original data in a secure vault. This, therefore, means that if tokens are compromised, those tokens are void of any data, and the actual data is still safe.
Real-World Applications
Tokenization is widely used in various industries to protect sensitive information. These industries include:
- Retail: Securing the customer’s payment information through transactions.
- Healthcare: Maintaining patient records and personal health information security.
- Finance: Protecting any account detail and the consequent transaction information.
In addition, biometric tokenization is an emerging approach to encrypting biometric data like fingerprints and facial recognition templates to tokens in order to increase privacy and safety.
Conclusion
Now that digital transactions are becoming more common with each passing day, the need to ensure payments are made securely cannot be overstated. As an effective solution, tokenization implements the protection of sensitive data, minimizing its exposure, minimizing fraud, and improving customer confidence.
OmniPayments offers complete tokenization solutions for businesses that wish to enforce highly advanced security to cover the payment information. Contact us to learn more about how our solutions can save you a ton of effort and secure your business’s future.
