Tokenization’s Benefits

Tokenization’s benefits

Tokenization is a popular security technology used to protect credit card data from thieves and hackers. But how does tokenization work? What are the benefits of this payment solution?

Before jumping into the benefits of tokenization, let me explain to you a bit about what tokenization is and why it is important.

Tokenization is the process in which sensitive information is replaced with a randomly generated unique token or symbol. These tokens would ensure that the data is not transmitted or stored in an unsecure format.

However, for the use of tokenization to be efficient in the payments industry, a universal standard must be created to ensure that merchants can support the technology across multiple providers, and without negatively impacting customer experience.

Tokenization makes it nearly impossible for criminals to ever get hands on sensitive financial information thus the primary advantage of tokenization is security.

 

Let’s take a look at the benefits!

1. PCI Scope Reduction

Reducing PCI scope by using token data instead of a 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 benefited 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 other requirements when you store real cardholder data on your systems and applications.

Tokenization makes it easier for merchants to become PCI compliant because retailers do not store any data so they do not have to invest as many resources protecting sensitive customer’s information.

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.

 

2. Internal Protection

Tokenization does not simply stop anonymous criminals but it does protect sensitive info from those connected to your organization too such as employees, suppliers and vendors. A random generated token IDs are only readable by the payment processor only, not anyone else.

 

3. Online protection

You might hear about EMV before – chip-enabled credit cards that offer extra security for retail shoppers. For transaction to go through, the chip must be presented and customers must apply either a signature or personal identification number (PIN).

However, virtual world makes security feature becomes obsolete since the chip is not physically present at the time of purchase. By contrast, tokenization offers unparalleled protection - whether you conduct business online or at a traditional pop-up store.

 

4. Compatible with other Technologies

Tokenization works both with the plastic credit card and gift cards like BCard, NFC payments and Samsung Pay.You can protect the data of your customers no matter how you choose to send and receive money.

 

5. Cost-effective

Tokenization is easy to set up and cheap. You do not need all the extravagant hardwares since most of the changes happen on the payment processor’s side.

 

6. Other protections

  • Patient records
  • Employee files
  • Username and passwords
  • Email address
  • Financial information by merchants

 

All in all, 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.

To find out more about payment method for your business, contact Razer Merchant Services. We are very happy to assist you.

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