Tokenisation is an easy process in theory but the complexity of different implementations can add to its complexity. Tokenisation involves the break-up of a particular piece of information or assets into a set of mathematical tokens and then incorporating the tokens as an active part of each transaction. In the world of payments, it is the client’s principal account number (PAN) that is transformed into tokens by replacing it with a random sequence of numbers as well as alphanumeric codes. These are tokens. They function as an abstraction of the data so that the sensitive data will not be disclosed when an online payment transaction occurs. Tokenisation offers many advantages.
Tokenisation in the Payments Industry
Tokenisation isn’t a brand-new idea in the payment industry. It has been in use for a while. In recent times, the entire concept of cryptocurrency as well as distributed ledger technologies is built on tokenisation. Tokenisation is integral to the industry of payments, and can benefit it in these ways:
PCI DSS compliance levels are determined by the volume of transactions over a twelve-month period. Merchants are classified into four levels to ensure compliance. Level 1 is the most stringent standard of regulatory compliance. It comprises merchants who process as many as 6 million transactions annually regardless of payment method. Level 4 is the least standard of compliance, which is comprised of merchants with not more than 20,000 online transactions, or less than one million transactions through any kind of payment method. If you are a merchant, joining a PCI-certified processing company is the simplest method to ensure that the standards are being met.
Other commonly-cited data storage regulations include HIPAA-HITECH GLBA, ITAR, and the newly introduced GDPR. While none of them specifically pertain to the payment industry, they make use of the latest technology (encryption or tokenisation) to protect the sensitive data of customers.
What is tokenization in payment industry?
Tokenization is a technique used to substitute sensitive payment details with a distinctive identifier or token. This token may be utilized as a replacement for real payment information, like a credit card number while performing an online transaction. The purpose of tokenization is to safeguard sensitive payment data and decrease the possibility of fraudulent activities.
What is token method of payment?
This modern payment method replaces confidential credit or debit card information with a distinctive identification code known as a ‘token’ that is utilized during digital transactions. As a result, online transactions become more secure as the customer’s actual card data is not required to be provided anymore.
What is token used by banks?
A bank token can come in the form of a convenient device, like a hardware token (such as a key fob, USB key, or smart card), or a soft token, like a standalone authentication application downloaded from an app store or integrated into a mobile banking application and installed on a mobile device.