Monday, May 27, 2024

Tokenization of Payment Cards: Advantages of the Technology

When we purchase over the Internet, we specify our payment card number, its expiration date and CVV-code during the payment. On the one hand, paying for purchases this way is very convenient and fast. Still, on the other hand, confidential information about your card becomes known to the intermediary who makes the payment. The Wallester platform allows you to tokenize any card and make its use on the Internet as secure as possible. What is the essence of tokenization and what are the strengths of this technology, we will consider in this article.

Tokenization: What is the Essence of the Technology?

Tokenization is a process in which a token replaces the unique details of a payment card. A token is a unique number generated and further used to identify the means of payment during payment. When you pay for a purchase over the Internet, you do not pass unique bank details to the merchant, only the generated numbers. It is used by the seller solely for payment authorization, but it will not give him access to the buyer’s confidential data. Even if some attacker steals the merchant’s database where customer tokens are stored, he will have access to meaningless numbers, and confidential information about the details will not be available.

This technology was first discussed in the early 2000s when TrustCommerce used the Citadel service to convert real customer payment details into tokens. After adopting the new banking standard PCI DSS in 2004, which imposed strict requirements for protecting confidential information, all companies that had established branded card issuing began to use tokenization en masse.

Now, tokenization is very popular in the payment industry, so companies from different spheres use it:

  •       online commerce;
  •       mobile payments;
  •       electronic payment services;
  •       fintech;
  •       BIN sponsorship, etc.

The use of tokenization in these areas aims to ensure security and prevent third parties from accessing financial information.

Benefits of Tokenization for Business

Private entrepreneurs and large businesses get a lot of advantages from the use of tokenization technology:

  •       High level of transaction security. The store receives at its disposal not confidential information about the card but a generated code. Its loss or theft will not be of any use to an attacker and will not compromise your business;
  •       Simplified compliance with regulatory requirements and security standards. Protecting tokens is much easier than ensuring the safety and confidentiality of payment card details belonging to customers. Using tokens allows you to reduce risks and avoid difficulties associated with online payments;
  •       Ease of integration with any platform. Any merchant platforms and payment services accept tokens. It helps businesses to be more flexible and quickly adjust to market changes;
  •       Comfortable use. The process of paying for purchases becomes as simple and convenient as possible. The customer does not need to enter payment card information every time while making online purchases. It helps increase the number of online purchases and hence helps increase the company’s profits.

For companies dealing with sensitive customer payment information, tokenization helps keep it secure.

Benefits of Tokenization for Customers

Tokenization is a technology that has a lot of benefits not only for businesses but also for their customers. Let’s list 4 of its main advantages for customers making online transactions:

  •       Fast payment for purchases. Making repeat purchases with a token is much easier than entering payment details every time. After the first purchase, the payment service or provider tokenizes the used card, and the buyer no longer enters the card details when making subsequent purchases. Any card can be tokenized. It can be a White Label card, a non-personalized card, a name card, a debit card, a credit card or any other payment card;
  •       Low probability of fraud. The token has no specific information about the actual bank card details. Even if an attacker gets hold of it, he will not be able to unravel the numbers, and the cardholder can cancel the compromised token and replace it with a new one at any time. The main payment account and its details will not change;
  •       High degree of privacy. The token has an expiration date, and some parameters can limit its use. It allows you to save privacy and control access to confidential information.

Today, tokenization is the only technology that can provide maximum security for payments in e-commerce.

Claire James
Claire James
Claire is an accounts manager at Fire Digital UK, an online publishing and content marketing company based in the North West.

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