What Does Tokenization mean?

It is a technique of using unique tokens to replace sensible data, like birthdate, and addresses while keeping all the crucial information about it. This technology means a non-destructive way of keeping data secret. The reason is that data is renewable with a special renewing key.

It is frequently asked what the is the difference between encryption and tokenization. Unlike encryption, tokenization does not need to use keys to alter the original data.

To give a further explanation, tokenization is a kind of replacing code that uses a special key to bring back the original data. For instance, the tokenized version of the numbers of your credit card has kept its last four symbols, but the rest of the digits are randomized. The token is now acceptable to store in any database. Whoever has got access only to the replacing token is not capable of using it to endanger a credit card account. Getting a tokenization solution, including free tokenization, is going to provide you with great security.

To use the tokens to execute credit and transactions, they must be retraced to the data. A trusted third party often performs this retracing.

What Kind of Information Has To Be Tokenized?

This technology is widely used to secure numbers of credit cards, and it is required by the Payment Card Industry Council. Nonetheless, there are plenty of different cases when tokenization is used to securely deposit delicate data. Think of personally identifiable information data or PII. Such kind of information must be held with the utmost care, including secure deposit of PII and anonymization. Any organization is obliged to use this technology when their business includes handling sensitive data, for instance:

Credit card number
Passport number
Date of birth
Gender or race
Driver’s license number
SSN
Bank account numbers
Addresses
Telephone
Etc.

What types of tokenization exist?

When having to explain the kinds of existing tokenization, I like the idea that there are three most important types of it: payment service, pass-through, and gateway tokenization.

Tokenization for Payment Services

One of the strategies for tokenization is the model used for payment services. It arranges the only API that can trace transactions to different gateways after it is integrated. This model is great for those organizations that have complex transaction needs. If the business you own or work at has a need to make transactions in a number of countries or currencies or use plenty of processors and gateways, then this kind of tokenization suits you well. The disadvantage of this model is that the special gateway code that already exists is not going to be used one more time. However, the outcome is almost always worth it.

Not only it reduce PCI scope and boosts anonymity, but this tokenization model also has exclusive conveniences. In addition to simplifying the integration code, it prevents payment gateways from getting control over your tokens. Unlike gateway tokenization which will be discussed below, a token offered by a third-party organization can be used on any sustained solution. Contrary to it, tokens given by payment gateways cannot be used as opposed to a rival different gateway.

Gateway Tokenization

If you are running an electronic commerce business, then you may be receiving transactions by a payment gateway. Many of them have a special technology thanks to which gateways can save a birth date to their system and replace it with a token. From now on, when you execute a transaction, the system puts a replacement piece of data to the gateway in place of using the real birth date. That allows you to dismiss personal data from your system.

The main detriment of gateway tokenization is that every gateway has a special data replacement system. This makes you use this and only gateway. Replacing gateways generally is not a cheap and quick operation, meaning you will have to renew your clients’ data from tokens and move them to the new database. Sometimes such operation is not permitted by the gateway.

Pass-Through Tokenization

Some unique tokenization solution makers have an exclusive solution that is in-between the electronic commerce websites and the gateway. This technology empowers you to get used to the gateway integration program that already exists. One convenience of this kind of tokenization is that it improves your present technology and can be turned to be accessible in a short amount of time. Another superiority of this technology is that it’s interchangeable. As opposed to gateway tokenization, you may use it to cypher more than credit card numbers. You are free to use this tokenization technology to conjoin to most APIs and safely replace not just credit card data.

This type of tokenization is differentiated from payment services tokenization because it makes it possible to freely route transactions to various gateways in real-time. This allows to avoid pricey and slow information transfer to different systems of performing payments.

Conclusion

The main reasons for implementing tokenization are security and conformity. The important thing is that the compliance calls for online payments are problematic to deal with alone. Newly founded businesses are those projects that are willing to give up security for time to marketing and selling. Your organization is endangered by delinquent actors if you use online payments. Utilizing tokenization, including free tokenization, will provide you security and save money in the long run. The best solutions are:

Get a tokenization company that is sceptic about transaction gateways and bank brands.
Search for tokenization solution that can be implemented using no integration work.
Look for a company that can integrate different transaction and tokenization systems in one integration.

Tokenization is a key to conjoining your transaction solutions altogether. You have to find a provider that empowers you with control of your safely replaced data and boosts your safety codes.

Interesting Related Article: “Ensuring a Secure Payments Experience“