The Tokenization Process in Payment Security
Tokenization removes sensitive card information and replaces it with a token created by an algorithm that has no appraised value. Whenever a consumer enters payment information, the gateway immediately replaces the 16-digit PAN (Primary Account Number) with a unique token like “tok_1A2b3C4d,” which gets stored in merchant systems in place of actual card data. Tokens are merchant-specific and payment-method specific, which means that even if they get stolen, they cannot be put to good use. Vault-style tokenization from vendors like Stripe or Braintree keeps the token database in a central location, while Authorize.Net above-the-gateway level tokenization generates tokens at the time of processing. Tokenization has been endorsed by the PCI Council as one of the most effective solutions to reduce compliance scope since the merchants never come into contact with real card data. Even in case of a data breach, tokens cannot be reverse-engineered to find out the original payment information.
Advanced Tokenization Implementations
With tokenization systems today, one can surpass the use of cards but also resort to bank accounts (in fact, eCheck tokens) and even identity documents. All this becomes possible with the Visa- or Mastercard-Network-based tokens (like Visa Token Service), which use tokens to replace PANs at the network level and provide the feature of being used across several merchants. For example, one can develop a strategy described by merchants as “token-on-file” for repeat billing: Customer first-time authorization generates tokens for subsequent transactions but does not require keying card data again. For marketplaces, tokenization of multi-merchants is being used to let platform tokens map to sub-merchant accounts without compromising security. The newest birth of this has been in the portable tokenization, like that by services such as Spreedly, through which tokens are said to be usable across multiple payment processors. When a token is implemented, have your system available for monitoring expiration dates (normally 3-4 years for cards) and automatically notify customers about replacement for expired payments.
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