Have you ever wondered that every day, there’s always something new emerged? Seems like there’s a ton of new stuffs being created every day, right? Among all of those, few will naturally becomes a norm and replace the old ones. For the past several years, a significant technology have already carved its way to become a norm, tokenization. According to a report published by Research and Markets, tokenization’s global market will reach $2.25 billion by 2020. That is just in 2 years and it is a lot of money.
The reason for that positive growth are the concerns regarding potential frauds and cyberattacks. It caused a lot of attention for the last couple of decades. Seeing this as a threat to the e-commerce and e-payment world, tokenization were introduced as one of the solutions.
What is tokenization?
Tokenization is the process of converting credit card numbers into randomly-generated, undecipherable values called tokens. In other words, even if your customer data were hacked or intercept during the payment, the culprit will gain nothing other than randomly-generated characters with no meaning.
Sounds amazing right? Even the goliath card company, MasterCard encourages tokenization. So, if you want your business to thrive, here are several reasons tokenization can help you with that:
- Reducing the impact of security breaches
Tokenization empowered merchants’ end-to-end data security, from the point of data capture to storage as it eliminates the actual storage of credit card numbers in the Point of Sales (POS) terminals and merchants’ internal information system.
Basically, you are storing tokens instead of the credit card numbers in their systems. If a hacker somehow hacked and obtained the token, they will have something worthless and meaningless.
The real credit card details are stored safely in the database of the third-party tokenization solutions provider. This directly lifts the security burdens off you and pass onto the solution provider. Your business will be much safer and that will surely influence customer to buy from you even more.
- Better than data encryption
Tokenization is different from encryption. Unlike tokenization, encryption uses algorithms to generate a string of incomprehensible characters from a set of data like card details. This may seem similar to tokenization, however, it is reversible while tokenization is not.
The string of incomprehensible characters are easily reverse-engineer to its original character by hackers. On the other hand, tokens are irreversible because the characters are randomly generated and have no relationship with the original data.
If any breach happened and both were intercepted, the hackers will have a sweet time decrypting the encrypted data while they surely devastated when it comes to tokenized data. That’s how good tokenization is and how it can help you to expand your business.
- Reduced scope of PCI DSS compliance
The Payment Card Industry Data Security Standard (PCI DSS) is still a necessity compliance for tokenization even though its authenticity seems don’t need it. However, since merchants which utilize tokenization no longer store their customers’ credit card numbers in their POS terminals and internal systems, the requirement of PCI DSS are greatly reduced.
A prime example is the systems that provide security measures such as authentication servers which are covered by PCI DSS requirements are greatly reduced. This is possible due to the fact that tokenization enables the system to carry incomprehensible tokens instead of actual credit card details.