Business stores these days need protection from credit card frauds and malpractices because they will affect their income. A majority of customers use credit cards for retail and online purchases due to various reasons. However, merchants should make sure that the details of cardholders are safe from hacking and other potential threats. They should implement certain measures to prevent data loss. Encryption and tokenization are the two technologies meant for businesses to protect credit card data from thefts and unauthorized transactions.
What are encryption and tokenization?
Data encryption is a technique used for converting data into an unusable form that is not accessible by others. Moreover, it utilizes an algorithm to secure the data from unethical practices. Tokenization is a process that involves replacing a sensitive data element with a unique identifier that will retain all the information without compromising its security. It entirely differs from data encryption method where data uses a secret key to decipher the details. Another thing is that it gives ways to safeguard credit cards in a virtual vault allowing businesses to transmit data via wireless networks safely.
Knowing the difference between encryption and tokenization
Businesses that process credit cards should know the difference between encryption and tokenization in detail. This, in turn, gives ways to implement them accordingly to ensure peace of mind.
- Data exchange
One of the primary advantages of data encryption is that it allows businesses to exchange their data with third parties who have an encryption key. However, it becomes difficult to exchange the data in the tokenization because the process requires direct access to a vault mapping.
- Data volume
Data encryption makes feasible methods to scale large data volumes with just a small key for decryption purposes. In tokenization, it becomes difficult to scale the data securely and the technique maintains performance when the database increases in size.
- Format strength
The data encryption schemes always come with a lower strength when it comes to formatting preservation. At the same time, tokenization provides ways to maintain the format with high strength.
- Applications
Businesses can use data encryption for secured files as well as unstructured data that will result in more advantages. Tokenization allows a business to use it only for structured data such as payment cards.
- Expenses
Data encryption costs are expensive because the systems should have the capacity to maintain the data properly. Tokenization is less expensive when compared to data encryption.
Why encryption is not a secure solution for businesses?
Although data encryption offers many advantages to a business, it is not a complete securely solution. This is because when a merchant’s IT systems are easily prone to breaching that will result in insecurity. Furthermore, they can reveal the credit card details of customers to hackers that will result in thefts even if they are properly encrypted. The encryption keys can result in breaches that are vulnerable to thefts and decryption.
Reasons to choose tokenization over data encryption for card transactions
- Tokenization eliminates data theft risks
The main advantage of tokenization is that it doesn’t use any keys like data encryption that helps to ensure maximum protection. Besides that, the technique doesn’t return to its original form when compared to data encryption. The original data doesn’t leave any business and it can store the same with ease. Not only that, businesses can prevent data breaches and theft with tokenization that will impact their finance.
- Tokenization makes PCI compliance easier
Businesses should make sure that they comply with PCI when they want to process credit card transactions. With tokenization, they can overcome penalties and other problems that will help accomplish goals to a large extent.
- Builds faster trust with customers
One of the primary benefits of tokenization is that provides ways to build trust faster with customers that will help grow the business significantly. As customers like to process their transactions, tokenization lets a business not fall into the wrong hands by addressing the exact needs.
- Tokenization drives payment innovations
Tokenization makes the payment process safer on the devices thereby showing ways to minimize unwanted problems. Not only that, it plays an important role in enhancing the customer’s experience when they make payments using mobile wallets and other apps.
What are the challenges in implementing tokenization?
Even though tokenization is a straightforward process, businesses faced some challenges in implementing it in the early days. As a result, they moved to cloud-based applications for increased flexibility. This is because cloud tokenization is much more secure than data encryption that will help lower complications in card transactions. Also, it provides ways to remove the data from an organization’s environment. A business should know more about the challenges involved in tokenization implementation properly that will help serve customers better when it comes to card transactions.
