Before jumping into the benefits of tokenization, let me explain to you a bit about what is tokenization and why it is important.
Tokenization for your payment card processing technology removes sensitive cardholder data and replaces it with a worthless token. These tokens then become the customer identifier (as opposed to the actual card number) in the merchant’s system. As you can imagine, this is quite the buzz in the payment processing industry. As we have seen far too often, credit card numbers are big Target (pardon the pun) for hackers.
Why is tokenization important for merchants? The solution vastly reduces a merchant’s risk if a data violation occurs. If a merchant’s system is breached, the criminals would get the token numbers, which are essentially worthless.
Here are 3 Key Benefits to using Tokenization:
- Removes All Sensitive Cardholder Data from Your Systems and Applications
The only thing stored on your system is a string of numbers that is useless to an attacker. This allows you (the merchant) to rest easier knowing that any would-be attacker would find themselves with a bunch of nonsensical number strings rather than your customer's sensitive Primary Account Numbers (PANs).
- PCI Scope Reduction
Reducing PCI scope by using token data instead of real cardholder data (including even encrypted card data) eliminates a massive threat. Not only do you reduce the risk of a massive breach to your systems, you benefit from moving up in the world in the eyes of the PCI Security Standards Council. This could translate into avoiding the required need for PCI scans, penetration testing and or other requirements when you store real cardholder data on your systems and applications.
Have I mentioned that you also benefit from answering less questions on your annual PCI mandated self-assessment questionnaire (SAQ)? If you are storing cardholder data you are a SAQ D (326 questions) vs. moving to a SAQ C (only 139 questions). Again, toss in P2PE (Point to Point Encryption) and you really can do wonders for your security.
- Significant savings of time and money
The reduction of PCI DSS scope can save merchants significant time and money. Noncompliance can be costly, and can include fines of thousands of dollars and a per-card fee for each card that has to be canceled.
Are security concerns concerning you?
Tokenization is only one slice of the security pie in the payment card industry. It prevents sensitive cardholder data from entering a merchant’s environment after a transaction has been authorized, but combining tokenization with a P2PE solution (point-to-point encryption) protects the entire payment process. We will be discussing encryption in upcoming blog posts more thoroughly. For now, we can describe it as the state in which credit card numbers and other sensitive information is encrypted from the point of entry (card swipe) to the other end (the issuing bank). When combining P2PE with tokenization and EMV, you have hit what is called the Trifecta of Security.