Tokenization is an essential process in data security that protects sensitive information by replacing meaningful data like credit card numbers with random symbols called "tokens". In this guide, we’ll explain what tokenization is, how it works, its benefits, and more.
What is Tokenization?
Tokenization refers to substituting sensitive data like credit card or social security numbers with non-sensitive “tokens”. These tokens have no extrinsic value but can still be mapped back to the original data via a tokenization system if needed.
The tokenization process keeps data patterns intact so that applications still work without any changes while obfuscating data values so become meaningless if accessed by unauthorized users. For instance, a credit card number 4556 xxxx xxxx x456 could be tokenized as something like 7293 abcd abcd efgh.
How Does the Tokenization Process Work?
The original data (like credit card details) is sent to a tokenization server or API.
The tokenization algorithm applies hashing or encryption to scramble the original input data.
The algorithm generates a random token corresponding to the input data. Tokens look meaningless but keep the format of the original data.
The tokens and input data are stored together in a lookup table or token vault that maps tokens back to real data values.
The system returns the generated tokens and removes the original data wherever possible. Applications now work with non-sensitive token data instead.
Two Types of Tokenization
There are two main approaches used in tokenization:
Reversible (Two-way) - Tokens map back to actual data values via lookup tables. Used for internal data flows.
Irreversible (One-way) - Tokens have no mathematical relationship to data values. Used for external data flows.
Key Benefits of Tokenization
Some benefits of tokenization include:
Data security – Tokens have no exploitable value if accessed by attackers. Actual data isn't exposed.
Compliance – Helps meet regulations as tokens can stand in for sensitive data.
Analytics – Tokens still represent unique data so analytics capabilities are unaffected.
Cost saving - Tokenized data minimizes PCI-DSS compliance costs.
Conclusion
So in summary, tokenization is used to protect data like credit cards, SSNs and more by swapping values out for secure tokens instead. This allows businesses to improve security comply with regulations, analyze patterns in data and save costs while still being able to use and store sensitive information when necessary.