Tokenization

Tokenization

Last updated:October 4, 2024

In today’s digital landscape, merchants are constantly seeking ways to protect sensitive customer data and enhance their business operations. Tokenization is a powerful tool that not only secures card data but also enables seamless omnichannel experiences. This guide will help you understand tokenization and choose the right type for your business needs.

Understanding Tokenization

Tokenization is the process of replacing sensitive data, such as a cardholder’s primary account number (PAN), with a secure token stored in a token vault. This ensures that sensitive data is not kept in the merchant’s environment, reducing PCI compliance obligations and costs. In the event of a breach, sensitive data remains protected, maintaining consumer trust.

Choosing the Right Token for Your Business

Different types of tokens serve different purposes. Here’s a guide to help you decide which tokenization solution best fits your business needs:

Registration Tokens: Simplifying Online Transactions

Business Scenario

Imagine you run an online store and want to offer your customers the convenience of one-click checkout. Registration Tokens are your solution.

Benefits:

  • Simplifies PCI Compliance: By removing sensitive data from your environment, Registration Tokens help you meet PCI compliance requirements more easily.
  • Enhances Security: Reduces the risk of data breaches by not storing sensitive card data.
  • Improves Customer Experience: Speeds up the checkout process, making it more convenient for customers.

Example

A customer shopping on your online store can save their card details securely using a Registration Token. The next time they shop, they can complete their purchase with just one click, without having to re-enter their card details. This convenience can lead to increased customer satisfaction and loyalty.

ApplePay Tokens: Seamless Payments for Apple Device Users

Business Scenario

Imagine you run an online store that caters to a large number of Apple device users. Apple Pay tokens can provide a seamless and secure payment experience for your customers.

Benefits

  • Enhanced Security: Apple Pay tokens replace sensitive card details with secure tokens, reducing the risk of unauthorized use. Each transaction is authorized with a one-time unique dynamic security code.
  • Improved Customer Experience: Apple Pay tokens streamline the checkout process for Apple device users, allowing them to complete purchases quickly and easily using Face ID, Touch ID, or their device passcode.
  • Increased Trust: Customers are more likely to trust and use a payment method that is known for its security and ease of use, potentially increasing your sales.

Example

A customer shopping on your online store using their iPhone can use Apple Pay to complete their purchase with just a touch or a glance. The Apple Pay token ensures that their card details are never shared with the merchant, providing a secure and convenient payment experience.

Tokens Formats

Tokens come in two main formats:

  • Non-card format preserving. The token format is different from the sensitive information it replaces. For example, a Registration Token is converted into a universally unique identifier (UUID) in a random alphanumeric format.
  • Card format preserving. The token maintains the same format as the original PAN, but the values are randomly changed. For instance, an Omni Token keeps the first 6 digits (BIN) and last 4 digits similar to the original card number. This format is useful for loyalty programs and one-click checkout payment widgets.
Token Type Token Format Description Interactive Guide
Registration Token 123e4567-e89b-12d3-a456-426614174000 A UUID, a universally unique identifier in a random alphanumeric format. COPYandPAY
Server-to-server
Omni Tokens 123456XXXXXX3456 Preserves the first 6 digits (BIN) and last 4 digits of the original PAN. COPYandPAY
Server-to-server
Network Tokens 654321XXXXXX7890 A card format token where the first 6 and last 4 digits are randomized. COPYandPAY
Server-to-server
External Tokens A1B2C3D4E5F6G7H8I9J0K1L2M3N4O5P6 A random alphanumeric string generated by the acquirer. COPYandPAY
Server-to-server
ApplePay Tokens Encrypted JSON object Contains encrypted payment data, including payment method and transaction identifier. COPYandPAY

Conclusion

Choosing the right tokenization solution depends on your specific business needs. Whether you need to enhance security, simplify PCI compliance, improve customer experience, or streamline payment processing, understanding the different types of tokens and their benefits can help you make an informed decision. Tokenization is not just about securing data; it’s about creating a better, more efficient experience for both you and your customers.

See also