Tokenization is a security process that replaces sensitive data with a unique identifier, or token, that has no value or meaning, to represent the sensitive data in a secure manner, without exposing the data itself.
Uses of Tokenization
Tokenization is used to protect sensitive data – such as credit card numbers and social security numbers – from being stolen or compromised, enabling businesses to protect their customers’ sensitive data and reduce the risk of financial loss.
Tokenization is used in a wide range of industries, including:
- Healthcare – to protect patient information and comply with regulations, such as HIPAA.
- Financial services – to protect credit card numbers and other sensitive financial information.
- Retail and e-commerce – to protect customer information and enable secure transactions.
How Tokenization Works
Tokenization uses an algorithm to create a unique identifier for each piece of sensitive data. The token is then stored in a secure database, and the original sensitive data is deleted or stored in an encrypted format.
When a transaction is processed, the token is used to represent the sensitive data. The token is sent to the payment processor or other system that requires the sensitive data, and that system uses the token to retrieve the original sensitive data from the secure database. The sensitive data is then used to complete the transaction, and the token is deleted or stored in a secure manner.
