Tokenisation in online payments: robust protection against data breaches
Dealing with cardholder’s data, say nothing of storing it, places a great responsibility on any organisation. One of the modern types of data protection is tokenisation. It protects sensitive data against losses or thefts. Further, we’ll go into the matter of tokenisation and its impact on online payments.
What is tokenisation in payments?
Tokenisation is the process of replacing the payment card account number with a token, i.e. a unique digital identifier used in different types of transactions. This solution allows for processing payments without exposing sensitive details that could breach security and privacy. Tokenisation of a cardholder’s data during online payments makes it impossible to access sensitive credit card data and adds to overall transaction safety.
Tokenisation is replacing of sensitive data with non-sensitive tokens, which can be later used to get access to the original data. Tokenisation enables merchants to securely pass their customers’ data to a payment service provider.
Types of tokenisation
There are several ways to generate tokens, but the primary point is that tokens are NOT considered cardholder data.
In this type, the 16-digit credit card number is replaced with a token of a similar appearance. It includes only numeric characters. Some format-preserving tokenisation schemes can maintain the first 6 digits and the last 4 digits of the card number.
For example: Card number: 5111 1111 1111 1111 — Token: 5111 8647 2375 1111
Non-format preserving tokens
This type replaces a credit card number with a token which does not resemble the original. It can include both numeric and alpha characters.
For example: Card number: 5111 1111 1111 1111 — Token: 23c91e14-89f6-417f-9d60-7596a34u0829
So, what’s the result? A token restricts the misuse of sensitive information. The algorithm makes the data unable to be traced back to its source.
How does tokenisation make online payments more secure
Tokenisation in payment processing makes it difficult to reverse engineer the original data from a token. It eliminates the storage of credit card numbers, helping to improve data security. Moreover, it appears to be very beneficial to merchants, for it decreases the impact of expensive security breaches. In a word, tokens are absolutely useless for hackers, even if they get them. Customers don’t want to risk too. They would prefer their card account number to be tokenised during online payments. This simple process protects them against data and money losses in case of fraud.
We see that using electronic tokens in e-payment system relieves much stress from the whole process.
Benefits of Tokenisation
This solution takes the security of financial transactions to the highest level and also facilitates contactless payment methods (for example, payment by smartphone). Tokenisation during online payments brings forth a bundle of benefits:
- Increased customer trust. Using tokens instead of original payment card data offers an additional layer of security for eCommerce websites.
- Robust protection against breaches. Tokenisation eliminates the need to capture and store sensitive information in POS terminals, internal databases, or to transmit it through systems.
- Improved patient security. The substitution of sensitive data helps healthcare organisations better comply with HIPAA regulations (tokenisation can be of use for scenarios under HIPAA).
- Added security of card payments. Complying with extensive standards and regulations and protecting client information becomes easier with tokenisation.
- Convenience. Many online services use payment tokens during recurring payments, saving users’ time when re-entering bank card information.
- Less effort while complying with the PCI DSS. Tokenisation does not eliminate the need to validate PCI DSS compliance, but it simplifies the merchant’s effort.
Card Tokenisation parameter at PayCore.io
We at PayCore.io guarantee that sensitive card data will never affect your servers. We use a secure database consisting of a set of related tables. As a rule, data remains in the storage until it’s needed for identification of a person when paying or other related tasks. After the received data fulfils its function, it is returned to the repository or updated for further safe storage.
To enhance your protection, we recommend using the “Card Tokenisation” parameter when creating a payment invoice. This is one of the essential methods for protecting users’ confidential data with card payments.
- card payment data is stored in secure data storages and synchronised with tokens stored on your servers;
- tokens are created using proprietary algorithms and cannot be mathematically decrypted from the outside;
- the token format is optimal for storing sensitive data;
- tokenised data supports all payment transactions and clearance models (one-time authorisation, settlement, recurring payments, lending and partial lending, re-authorisation and provision of payment statements).
- theft of payment data becomes pointless for hackers and fraudsters, for even after hacking your server’s data, they will receive a set of alphanumeric codes, not card data.
- it enables you to reconcile payments without processing card data.
Tokenisation is widely used in eCommerce today. It enables additional protection of transferring sensitive data and prevents online businesses from data thefts and losses. Replacing sensitive data with tokens also reduces paperwork, the participation of third-party agents, and saves you additional costs.