Data Tokenization: A New Way of Data Masking

Roshni Khatri

14th Sep'22

During pandemic businesses struggled to comply with security compliance standards like the General Data Protection Regulation (GDPR) since they were compelled to adopt new working styles and technology and were slow to react to data breaches.

Tokenization techniques can be the security measures to consider the values of the original data. The strategy should construct a mapping system between tokens and the values of the original data, as well as consider the procedures and methods utilized to create the token. 

Auditor evaluations focused on the increased data vulnerability, lack of data compliance, and expenses associated with such incidents, while research looked at how businesses survived the pandemic in light of this unprecedented circumstance. So here we will discuss the data tokenization process; let's have a look!

 

What is Tokenization?

Tokenization is a process of swapping out sensitive data, which identifies the symbols that keep all the necessary information without compromising security. Tokenization creates completely random characters in the same format to replace the data. So there is a great impact of technology on human lives as it can lead the world with diversity.

Tokenization is a type of data masking that uses a new value, known as a token, to replace sensitive data. There should be no way to connect the token to the original data, which has no value. When data is tokenized, the original, sensitive data must still be protected because it is still safely held at a single location.

 

Data Tokenization

 

How does Data Tokenization Work for an Enterprise?

Tokenization keeps all relevant information about the data while masking or replacing sensitive data with individual identity data. Tokens are used to describe this equivalent unique replacement data. A non-destructive method of data masking is called tokenization, which allows one to recover the original data by using the token as a special replacement piece of information. 

Data encryption is made possible by data tokenization using two main methods: 

  • Value-Based tokenization

  • Vault less tokenization

Token values are used instead of the original data values in a database or data store in the first case, where a token vault acts as a dictionary of sensitive data values and maps them to token values.

As a result, a user or program can access the dictionary's initial value and its associated token, which can be reversed. The only location where the original data can be traced back to its corresponding token is the token vault. 

The second method of data tokenization excludes the vault. When adopting vaultless tokenization, confidential information is protected by storing tokens using an algorithm rather than a secure database.

If the token is reversible, the original sensitive data is often not maintained in a vault. Here is an instance of how tokenization with a token vault functions so you can understand it better. 

For any transaction, you must enter your credit card information. In a usual transaction, the credit card number is transmitted to the payment processor and afterward saved in the internal systems of the merchant for future usage. Let's check out this transaction after data tokenization has been applied.

  • When you provide your credit card number for any transaction, the card number is sent to a toke system instead of the payment processor.

  • The token system replaces your sensitive information—for instance, the credit card number or randomly created alphanumeric.

  • After the generation of the token, it is returned to the POS of the merchant terminal. With this, the payment processor in a safe completes the transaction successfully. 

Enterprises can transport data across wireless networks securely with data tokenization. Enterprises, on the other hand, must use a payment gateway to store sensitive data securely to perform data tokenization effectively. 

Thus a payment gateway generates and securely stores credit card data. 

 

Need of Tokenization

If you are an entrepreneur, then you aim to secure sensitive payments or personal information. Data tokenization helps you in achieving the data set with the indecipherable token. Here some primes reasons to use tokenization are described as under:

1. Decrease the Risk of Penalties and Data Breaches

Businesses can reduce the devastating financial effects of data theft by using tokenization. Tokenization does not safeguard personal data from any type of data breach because it does not encrypt it. 

Customers frequently migrate to competitors that are better at protecting their payment information when security is compromised, which results in a direct financial loss for firms.

 

2. Building Customer Trust

Tokenization aids businesses in building client confidence. By assuring proper formatting and secure data transmission, tokenization contributes to keeping online transactions secure for both customers and enterprises. Due to this, payment fraud and cyber attacks are substantially less likely to target sensitive data.

 

3. Meeting Compliance Regulations

Tokenization assists in complying with and upholding industry requirements. For instance, companies that take debit and credit cards as payment methods must comply with or adhere to the Payment Card Industry Data Security Standard (PCI DSS). Tokenization controls the security of the sensitive information connected to the cards as well as any costs related to compliance. 

 

Data Tokenization

 

4. Increase Subscription-Based Sales

The user experience during checkout can be made faster and better to enhance subscription-based transactions. Customers must securely keep their payment information to complete checkout more quickly. 

Credit card information is one type of financial data that tokenization helps to safeguard by using a non-sensitive token. This token value keeps hackers from deciphering it and establishes a secure environment for recurrent payments. 

 

5. Safe Data Sharing

Sensitive data is frequently used by businesses for other venture needs, like marketing metrics, analytics, or reporting. By implementing tokenization, businesses can limit the areas where sensitive data is permitted and make sure that tokenized data is accessible to users and applications performing data analysis or any other business function. 

By limiting users' access to only the information necessary to carry out a given task, tokenization can be used to achieve least-privileged access to sensitive data. 

Besides this, you should also know how to check if someone is spying on your computer, as it can help you in protecting your confidential data. 

 

Data Tokenization

 

Conclusion

The use of tokenization technology to replace sensitive data has many benefits for security and compliance. Two benefits that lower compliance costs and ease regulatory data handling requirements are reduced security risk and audit scope. 

Platforms for data tokenization provide a dependable approach to meet compliance requirements both now and in the future. This also enables businesses to focus on expanding their market share in volatile economic conditions.

 

We, at OpenGrowth, are committed to keeping you updated with the best content on the latest trendy topics from any major field. Also, both your feedback and suggestions are valuable to us. So, do share them in the comment section below.

A keen observer, who loves to spend time with nature. A fun loving person, enjoys to explore the new aspects of life. Passionate about reading and learning new things. Roshni is dedicated towards her work and has worked in different professions.

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