Every merchant needs to provide customers with a simple and convenient way of making payments to their business. Just as important is to ensure a consumer’s credit card data is safe from hackers. This is where payment tokenization comes in – it’s simply an added security measure safeguarding payment details.
What is Payment Tokenization?
Tokenization denies access to account details. It instead provides a token in place of the card or checking account number. Tokenization is most commonly available via PCI-DSS Level 1 processors. The technology replaces sensitive credit card information with randomly generated numbers or tokens. The token then passes on down the payment processing highway to prevent hacking.
Merchants or consumers view only the last 4 digits of a payment account number along with its expiration date, if applicable. No one on the front end views the created token. Tokens create randomly and therefore are not reversible. No algorithm creates a token, meaning data hackers cannot “break the code” to gain access. When a consumer either swipes or enters payment details, the payment gateway creates a token. The token can either be for one-time use or stored in the merchant vault for recurring, future payments.
A significant advantage of tokens is that they allow payments to process while keeping sensitive payment details locked down. Additionally, the token can only be accessed by either the consumer directly or the merchant. The payment gateway securely stores the token taking the responsibility from the merchant. However, some gateways or software “lock” tokens to their service. It’s important to ask if you have the ability to retrieve your tokens if switching to another payment processor or gateway.
Tokenization, in many ways, imitates the use of tokens in an arcade hall. Players in an arcade typically swap cash for tokens to play games. The token holds no value outside the business but makes it easy to play within the establishment. Similarly, sensitive cardholder data is stored on a payment token that can not be used outside of a merchant’s payment platform for another purpose. Even if a hacker accessed tokenized data, it could not be “exchanged” for anything else. A token’s main purpose is to facilitate safe payment transactions within a secure environment; outside that, it is of no use.
Apart from protecting consumers, tokenization allows merchants to accept payments without the risk of security breaches. In today’s virtual world, having this technology is paramount to success. In fact, many savvy consumers demand functionality. If your payment partner does not offer the solution, it’s time to make a change. For a decade, Payment Savvy has connected merchants with state-of-the-art, scalable payment solutions. Reach out to our knowledgeable team to learn how we can create the perfect payment for your business.