Presents a Brief Guide to Credit Card Tokenization

April 25 20:54 2022 Presents a Brief Guide to Credit Card Tokenization

As the world becomes more connected, businesses must look for ways to safeguard customers’ sensitive information. Many companies combine encryption, EMV, and tokenization to protect cardholders’ data. In this guide, we’ll offer some additional reading on the processes and benefits of credit card tokenization.

Card Tokenization: What Is It?

In card tokenization, sensitive information is erased from a payment processor’s internal network and replaced with a placeholder called a token. Then, the token is used to obtain, hold, and store card details, thereby protecting companies and consumers.

According to, companies across the country and around the world are moving toward using this technology. For more information one could read this article, ”Tokenization of credit and debit cards for safe online shopping from Jan: Here’s how the process works.” It’s preferred because of its complete protection, low cost, and ease of use, but its benefits and drawbacks must be carefully considered.

How It Works

Tokenization replaces sensitive card data with a single-use ID that’s not connected to the account holder. The random token is then used to obtain and transfer the card’s information, serving as a roadmap to where that information is stored.

Tokens are irreversible, created by an algorithm, and can only be opened when a transaction is finalized. Card tokens have no value or meaning outside a processor’s system, which means the information can’t be used by hackers. Here’s how:

  • A cardholder initiates a transaction and enters their information.

  • The data is sent to the acquiring institution as a token.

  • The token is submitted to a card network for approval.

  • Upon approval, the token is stored in a virtual vault and compared to the purchaser’s account number.

  • Funds are verified and the transaction is denied or approved.

  • When approved, the seller receives a token that is usable for current and later transactions.

Because this all happens internally, customers don’t have to do anything extra to take advantage of tokenized payments.

The Advantages of Card Tokenization

Credit card tokenization protects payment details from internal and external threats. It also offers benefits such as:

  • Internal readability. Randomized tokens are only readable by payment processors and have zero value to cybercriminals.

  • Easier compliance with regulatory standards. Some companies that store and use sensitive data have difficulty meeting PCI DSS standards, which carries the potential for stiff penalties. Tokenization allows merchants to comply with these standards at minimal cost.

Tokenization has uses outside the protection of customers’ card information. In some cases, it is used to protect addresses, passwords, account numbers, and confidential documents.

What’s the Difference Between Encryption and Tokenization?

Both tools effectively combat card fraud, and the terms are frequently used interchangeably. However, there are a few differences.

  • Encryption converts sensitive data into a code that’s nearly impossible to decipher. However, it can be recovered if one knows the algorithm.

  • Tokenization disconnects the data from the account holder, which makes it a more secure option for transactions where the card isn’t present.

To provide the most protection and ensure PCI DSS compliance, it’s best to combine tokenization and encryption.

Tokenization and Safer Business

When companies store, process, and transfer card information by mail, mobile, or online, they must recertify with PCI DSS each year. Staying compliant with these requirements is a challenge, and the failure to do so will leave an organization accountable for any losses. Card tokenization with TokenEx protects customers’ information, keeps transactions safe, and ensures that PCI DSS guidelines are followed.

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