Credit cards tokenization and how it is connected to PCI DSS

It is incredibly difficult to imagine today’s world without credit cards and modern banks. Credit cards are a convenient, compact and fast way to pay for groceries, utility bills or pay for delicious coffee in your favourite coffee shop. But modern privileges entail modern challenges.  At the same time as paying for a coffee, many people may be concerned about the security of their personal data and the security of money in bank accounts. Therefore, new methods and technologies of personal data protection and security are emerging as banks and other financial organizations are trying to protect their clients and their own countability.

One of the most modern and powerful technologies of data protection and securing is tokenization. A word that raises more questions than answers as only a few companies in the whole industry adopted it. This article seeks to clarify what tokenization is and why it is considered to be one of the strongest methods of security protection. And moreover, it will cover such topics as whether PCI DSS compliant tokenization.

The reason why tokenization is less spread than expected is a lack of knowledge and understanding. To streamline understanding one must start first. So, what does tokenization mean?

Tokenization is often confused with data encryption. But in fact, the tokenization as s process is significantly different from encryption. Moreover, it includes a data tokenization tool, which guarantees safety. More explanations are ahead.

Tokenization is an operation of replacing data that carry confidential information and data. To protect it, data is replaced with the so-called token, which may be understood as a non-sensitive element.

A token is a combination of random signs or to put it professionally it is an alphanumeric identifier. The token contains no important information. On the contrary, token data is a set of random symbols or elements. A striking instance of tokenization is the replacement of bank account details or numbers of the credit card with random symbols or elements. The token does not destroy the data, just as it does not harm it. All original data is stored and protected at the same time. The token is randomly and real-time generated, making it even more secure.

A very common mistake is to confuse such processes as tokenization and encryption which are not two peas in a pod. The main factor to understand the difference between them is the key.

In the encryption process, there is the key that allows you to decrypt the data. In tokenization, such the key does not exist, because the token does not change the date, but replaces it. 

Tokenization protects bank numbers and credit card numbers. As already mentioned, during tokenization, the sensitive data about credit cards is replaced with a token. This replacement is done in order to establish a certain barrier or better to say the gap between the transaction process and confidential data. As a result of this replacement, it becomes more difficult to access sensitive personal data. This is especially important when transmitting data over wireless networks.

In the age of digitalization and online transactions, another important concept for understanding this topic is a payment gateway. The payment gateway is a well-known service widely used by banks and e-commerce. This service allows direct banking transactions using bank cards. A payment gateway is the storage of credit cards as well as an accidental generation of tokens.

Speaking of tokenization, it is important to clarify its connection with the international standard for payment card industry data security. It is called PCI DSS, which means Payment Card Industry Data Security Standard. Tokenization reduces PCI DSS to say so. It means that tokenization reduces the costs and risks of online businesses and banks while they try to limit PCI. It goes back to CHD which means cheque deposit. Less it is held by the organization, the easiest it is to protect the data and assure the Qualified Security Assessor that it is done properly and thoughtfully.

To make it a little bit clearer tokenization removes the need for CHD storage. In this way, companies can meet security requirements while not storing arrays of information. Organizations do not handle personal and confidential data, but only process tokens. In turn, it allows for avoiding PCI DSS which means that no security is needed if no data is engaged in the process. This keeps your data safe, which prevents fraud and theft. Nevertheless, before trusting any personal data or confidential information to any bank or financial organization make sure it meets PCI DSS.

If the organization decides to use tokenization services, you should also make sure the reliability and professionalism of the “supplier”. It is important that the vendor uses powerful security controls as well as the system is protected and approved. Last but not least, tokenization is connected to the way in which your company interact with its client`s data. A number of factors and indicators should be taken into account.

Many organizations and companies are wondering whether it is worth using tokenization. The answer is rather yes. In any case, tokenization reduces risks and disclosure of personal information.  But before you dive headfirst into the world of tokenization, you should think carefully about the vendor and its reliability. Before signing a contract with a specific provider, it is vital to evaluate all the risks and weigh all the pros and cons. Last but not least, it is chiefly essential to remember that the issue of security is the agenda of the XXI century.