Credit Card Tokenization

What is Tokenization?

In this digitally advanced modern world, the online payment methods are increasing in number along with the advancement in the technology. The organizations need to provide and comply with effective data security standards as the security solutions so reduce frauds and data breaches. The series of the effective methods employed for keeping the cardholder data safe has a multi-faceted trajectory, combining EVM, Data Encryption and Tokenization. This blog will focus entirely on the Credit Card Tokenization and Credit Card Tokenization Services as the only one part of the effective data  security approach.

Tokenization is substantially a process of substituting a non-valuable token as a replacement for the sensitive cardholder data. The token represents the sensitive information by a random string of characters.

The token is basically a random string of characters and they are used to depict or represent sensitive information of the credit card that is maintained during the transaction. This prevents the details of credit cards being exposed across the payment gateway.

Concept behind Credit Card Tokenization

Here is a 6-step follow guide which describes the detailed procedure of how the credit card tokenization happens; learn the concept behind it and how you can leverage Credit Card Tokenization Services:

Step 1: Initiation of the payment

The process is initiated at the moment when the client enters and submits his sensitive credit card information with the company who provides the transaction services. The client has the authority whether to submit his credit card credentials for a single transaction or furthermore for future transactions also.

Step 2: Requesting the token

During the tokenization process, the company which requests for the credit card information or is involved in the transaction process will provide the token. They are authorized to render the token for the credit card sensitive information themselves or they can do this using a remote token service provider server.

Step 3: Merchant obtains the token.

At the first part of the transaction, the respective shopkeeper requests for the token. Once the shopkeeper receives the token from the buyer, he transfers it to the merchant who will process the transaction. In fact, the token is virtually treated as the credit card number.

Step 4: Authorization step of the token

The card company who issues the token to the individual will receive the token from the merchant and compare it to their own check-list for the token’s authorization to check its validity. The card company has the authority to either receive or reject the transaction.

Step 5: Approval step of the token

In this step, once the authorization is finished, the card company will debit the payment from the customer’s account to the shopkeeper’s account. This confirms that the transaction can be completed with the use of the token. During the whole procedure, the merchant is not authorized to see the card number and other sensitive information except the token which is issued by the card company.

Step 6: Completion of the transaction

Once the transaction is completed and everything is approved, the shopkeeper will receive the money and the customer will receive the goods or service which they may have requested.

Applications of Credit Card Tokenization

The applications of the credit card tokenization and factually Credit Card Tokenization Services depends upon the environment or the medium through which the transaction is happening. The mediums for the transaction completion are classified as to be:

  • Online Transaction Tokenization can be utilized in case of an online transaction which is also called a card-not-present transaction.
  • In-Store Transaction Tokenization can be utilized in case of store purchases which is basically a card-present transaction.
  • App/Mobile Transaction Tokenization can be utilized in case of mobile application purchases.

Benefits of Credit Card Tokenization

The credit card tokenization has several important advantages - the most obvious is that it keeps the wrong hands away from the customer’s credit card and bank account information.

Here is how the Credit Card Tokenization will prove to be beneficial for the merchants as well as for an ordinary person.

  • Enhanced Security The tokenization helps in the improved security of the sensitive cardholder credit card information. If any attacker steals the tokenized data, they will be unable to use the data against the person because he will not be able to relate and connect the token with the original credit card number. This way, through tokenization the risk of exposure of the sensitive data minimizes.
  • Cost Effective The cost of penalties imposed as the consequence of not meeting the PCI Compliance Standards will be reduced and the customer’s data will be secured if an individual works with the right platform.
  • Effective User Experience During the online transactions, the customer saves his credit card information in their mobile wallets or at the checkout. By using a PCI compliant payment platform, the one-click payments will help customers to provide smooth transactions and enhanced user experience.

Does every Credit Card Processor facilitate Tokenization?

Not every credit card processor facilitates the tokenization convenience. In such cases, one can use a 3rd party tokenization service provider. Some credit card processors support free tokenization providing services but some charge for it. Hence, tokenization is a process which is cost associative.

It is advisable to use the tokenization facility for everyone for securing their credit card number and other sensitive data for maintaining confidentiality. This will protect you from various threats and further protect you from future risks.

Tokenization vs Encryption

The concept behind the Tokenization and Encryption is very similar that is, protection of the sensitive data and information. The contrast between the two concepts is regarding the extent or the degree of the security it renders.

The conceptualization behind encryption is the replacement of the sensitive data with a value which will be visible to the only person who poses the key to unencrypt the data and read it. Possessing the same concept, the Tokenization is the method of generating the token of the sensitive data but the token cannot be reversed as in the case of the Encryption. Therefore, the method of Encryption alone is not a safe solution. The PCI Compliance is incorporated in the Tokenization which makes the procedure of Tokenization as trouble-free and less expensive.

Wrap up

Tokenization is the vital step for maintaining the confidentiality of credit card data.

The credit card tokenization is very essential for every individual whether customers or merchants. The companies and organizations, instead of giving an afterthought to the security concerns for disclosure of credit card sensitive information should use every tool at their counterpart to safeguard their customer’s information. It gives a sense of security and peace of mind to people.

One should keep their credit card information secure and safe by using the technology of Tokenization. It will be very beneficial for everyone to store fewer details locally so that lesser data is available for the attackers for theft.

Consult our professional and experienced experts regarding the credit card tokenization in case of any complexity.

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