What is tokenization and how does it make your online payments more secure?

Tokenization has evolved from being a concept handled within a small circle of experts using very specific applications, to a master key for improving customer experience during the payment process. Here at Easy Payment Gateway, we highly value such innovative solutions, but do we really know what tokenization is and the advantages it poses?

The process of tokenization represents a secure means of storing payment method information; such as bank card details. Basically, a card is introduced into the system and a token is generated in return. The token acts as the indicator to retrieve the card from the system when it is needed, and it has no relation to the card. Therefore, just having the token does not give you access to the card information without passing through the tokenization system.

This explanation, which may seem rather complicated, becomes much easier to understand with an example. Imagine that the tokenization system is a book. When your card is delivered to it, it is stored on a randomly opened page and in return, you are given the page number to find the card. In this way, when you wish to use that card, you provide the page number and book provides you with the card. With this process in place, anyone who has access to the page number may not access the card without asking the book first.

When we apply this to the real world, we begin to see its advantages. Let´s imagine a website selling certain products, but which also provides recurring deliveries. The first time that a client purchases from the website, they will introduce their card themselves, but for recurring transactions (such as the delivery of specific cosmetics on the first day of each month, for example), the details will have to be stored by the website in order for a monthly payment to be made.

If the card information is stored incorrectly, unauthorized personnel or even some types of criminals can access it, causing a nuisance to the consumer and a serious problem to the merchant. To resolve this problem in the most convenient way, we look to tokenization.

The first time that a client introduces their card, the payment platform collects the information and delivers it to the tokenization system that will then return the token to the website and process the payment. The website will store the token in association with details entered during the registration process

For future payments, when the company which owns the website needs to charge the client, it will just have to send the amount and the token to the payment platform. The platform will then supply the token to the tokenization system and in turn, will receive the card number and carry out the transaction on behalf of the website.

With this process, the website does not need to store the actual card details in order to carry out payments, and the payment process will be limited to the dialogue between the tokenization system and the payment platform, both elements which are characterized by their high levels of security.

Considering the impact that the ongoing COVID-19 pandemic has had on cyber-security, these safety features have become more important than ever before. Since the outbreak, cyber-crime has skyrocketed as both businesses and their clients must now look to online solutions for all kinds of transactions. This means that more and peoples card details are being processed and stored, creating an increased number of opportunities for cyber-criminals. Therefore, security solutions such as tokenization are arguably more important than ever, as they can assure the client that their sensitive data is protected, helping to form a sense of trust and loyalty between businesses and consumers.

As we can see, tokenization has multiple advantages such as, such as the secure processing of recurring payments, elimination of the need to ask the client to input their card details on multiple occasions, etc. As a result of these advantages, among others, the utilisation of tokenization is becoming more and more frequent. It is, therefore, a booming process, that is undoubtedly here to stay.