Payment security is top-most priority for online merchants as well as customers. In today’s world, when there are high profile data breaches all around, everyone wants to be assured that their data is safe. Tokenization and encryption are two effective ways to secure payment services. Even though they are often mentioned together, but they are not the same thing and neither they are interchangeable.

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In this article, we will help you learn more about tokenization, how it helps to secure payment services and the main advantages of this payment solution.

Understanding tokenization

What is tokenization? In simple words, it is a highly-secure method of protecting payment information and credentials from thieves and hackers. In this, the customer’s sensitive data (credit card, account number etc) is substituted with a one-time number which is known as a token. This token has no value and is in no way connected with the customer and his account. The 16 digits primary account number (PAN) of the customer is replaced with a randomly generated alphanumeric ID. This way, these tokens help in reducing security breaches. For tokenization to work, you need a payment gateway that can store the sensitive data and generate a token.

What are the benefits of tokenization?
Online transactions come with a risk of fraud, so it is important to reduce the risk and secure online payments. Tokenization helps in reducing security breaches as with tokens, no one can steal money or sensitive data.

Every time when a customer uses his/her credit or debit card at a particular merchant's store, the same token number is given to the merchant's system. This helps the customer to pay with one click for all his future purchases at the merchant's store. This enables merchants to keep a track of the customers buying history. Furthermore, the best part is customer's credentials are not stored on the merchant's servers, which minimizes the risk of exposing sensitive data.

Tokenization helps not only helps in protecting information from criminals, but it even protects sensitive information from people who are connected to your organization like your employees, vendors, suppliers etc. The randomly generated tokens are unreadable by anyone else but the payment processor.

It helps credit card data safe from threats. When payment information is tokenized, payment processor decodes the information in order to process that payment. That is why it is important to partner with a payment provider that places emphasis on data security.

Tokenization also works with gift cards, ACH transfers etc. So, now you can protect your customer’s data no matter how they choose to send and receive money.

Also, tokenization is a great solution for mobile payments, as it allows instant use. This means tokenization is not only secure but it also allows payments to be done in seconds.

Even though online merchants make use of tokenization mainly to protect financial information, but in many parts of the world, retailers often use this technology for patient records, employee files, usernames and passwords and email addresses.

Final words

As you can see, tokenization is a win-win solution for both the merchant as well as the cardholder. Tokens are created through random algorithms, which mean they cannot be reversed or linked back to original data. It is an incredibly cost-effective and relatively easy to set up solution, which can prevent the loss of sensitive data and help secure payment services on your website and mobile application.

So, next time you choose a PayTabs payment processing service
, ensure that it focuses on the tokenization method and other security regulations to secure your online business.

Author's Bio: 

PayTabs is an innovative payment processing and fraud prevention company, built to provide buyers and sellers an advanced technology to pay and get paid.