December 7, 2015

How Does Tokenization Work?

data security tokenTo understand how tokenization works, it is important to understand what it is. In simple terms, tokenization when applied to data security is a process in which a sensitive data element is substituted with something non-sensitive known as a “token.” This unique identification symbol retains all of the data’s essential information, but without compromising security.

Because tokenization minimizes the amount of data that your business needs to maintain, it has become increasingly more popular for boosting security of e-commerce and credit card transactions while minimizing costs, as well as the compliance complexity associated with government regulations and industry standards.

The Tokenization Process

Unfortunately, a number of large corporations have made the news due to data breaches. However, security threats are ongoing for small to mid-size companies, as well as companies like JP Morgan Chase, Target, Kmart, and others. Therefore, you need to implement a technique that safeguards proprietary information, which is what tokenization accomplishes.

Tokenization prevents hackers from breaching your company’s security, and works in the following ways.

• Proprietary information, including credit card and bank data, is replaced by a token with no exploitable or extrinsic value or meaning.

• Since the token is sent to the cloud system for processing and storage, at no time does the bank ever lose control of critical documents or data.

• Data is put into the loan originations system associated with the bank, readable only by someone with system access.

• To replace sensitive data, sequentially generated tokens are assigned arbitrarily.

• The data and tokens enter an encrypted area of high security referred to as the “vault,” where a database is maintained that matches the original clear text data to the token that replaced it.

• Because only the tokens leave the bank, sensitive information has protection while in transit to the cloud and while being stored.

• The only people with full access to the data and use of the cloud service are authorized users, who must access the cloud via the token vault.

Key Reasons for Using Tokenization

Following are the key reasons for using this tokenization.

• Because the bank maintains constant control of proprietary customer data, external systems never have access to real data.

• Since strong tokens are not linked mathematically to the original value that they replaced, security is strong.

• When using tokenization with a Cloud Data Control Gateway to prevent security breaches, the authorized user gains full control over the cloud application, even though some data is tokenized.

Getting Professional Assistance

To ensure your company is fully protected, and for streamlined processes and marketing purposes, you will benefit from Chosen Payments services. In addition to being a PCI expert, meaning that Chosen Payments is a PCI-compliant merchant services provider, this company offers a comprehensive list of services such as credit card authorization, POS integration, online reporting, and EMV services, among others.

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