Whether your business is in retail, healthcare, education, or eCommerce, it’s essential to maintain compliance with payment card industry data security standards (PCI-DSS) and protect sensitive credit card information from data breaches. If you’ve been researching payment security for your business, you’ve likely come across the terms “encryption” and “tokenization.” Since these security options often go hand-in-hand, many people believe the terms are interchangeable. But in fact, encryption and tokenization are entirely different security measures, each with their own set of strengths and challenges. When it comes to protecting your customers’ private data, it’s important to know the difference so you can make informed decisions about payment processing security for your business.
Put simply, encrypted data is when data is translated from its raw form into a code that can only be decrypted by authorized parties who hold the secret access key. In the event of a hack, encryption makes it extremely difficult for cyber thieves to decode and access the original clear-text data. Because encryption is a mathematical algorithm designed to be decoded, it’s not impossible to break. However, the stronger the algorithm used to create the code, the more difficult the key is to crack.
The strongest form of encryption is point-to-point encryption, or P2PE. With P2PE, data is encrypted on a card swipe terminal or PIN Entry Device (PED) as soon as a customers’ card is swiped, ensuring that no raw data enters the merchant’s system, and protecting information from the point of sale to its end destination. During this process, P2PE creates an individual key for each piece of data, meaning millions of keys to keep data safe.
While P2PE is a strong security measure, it is often combined with tokenization to create an even more powerful barrier against hackers. During the tokenization process, sensitive information is replaced by a random series of characters, called a token. Unlike mathematically coded encrypted information, tokens are made up of random numbers and characters — they have no mathematically decryptable pattern or algorithm.
Once tokenized, data is then stored in a token vault with a third-party cyber security agent. This vault stores both the token and the original payment data — which is encrypted for an extra layer of protection. The token vault is only accessible by the payment processor and the token can be safely reused for future payments.
In short, tokenization ensures that even if a hacker manages to access sensitive data in transit from the merchant to the payment processing company, the information is useless.
Which method is best for your company?
Because tokens have no value to hackers, it is a common misconception that tokenization is the safest method of protection for sensitive information captured within a merchant’s own systems. However, as you can see from the descriptions of each method, tokenization and P2PE are most powerful when used in tandem. While token vaults must still rely on encrypted code to keep sensitive data safe, encryption is reversible by design. Thus, the security of sensitive data must be strengthened by associating tokens to the encrypted code to provide a truly secure payment environment.
Above are just a few of the ways that encryption and tokenization can work together to help protect your company from data breaches and maintain PCI compliance. You can read more about the benefits of using P2PE coupled with a tokenization service provider here. To learn more about how Paymetric can help protect your business, contact a representative today.