With advancements in recent technology, many consumers are now making purchases using their mobile devices. As a result, merchants are taking note of the popularity of mobile payment technology and are beginning to accept mobile transactions. Since mobile payment technology is new, there is now a heightened concern on how secure and safe purchases will be. Tokenization is a form of security for mobile transactions and has several key benefits. 

 

What is Tokenization?
Tokenization is the process of replacing a debit or credit card number with a valued “token”. Tokenization takes personal information, or the primary account number, and replaces it with non-sensitive data, such as symbols, letters or any other random sequence of tokens.  For instance, tokenization would convert a customer’s credit card number to appear as EWK1928402EAC904 as a token. These numbers and letters are randomly produced each transaction to help heighten protection and security. 

 

How is it secure?
Before tokenization, traditional payment processors used the magnetic stripe on the back of the consumer credit card, which led to several high-profile data breaches.  While the traditional magnetic stripe processing method is efficient, it doesn’t come with the added level of security that tokenization provides. Tokenization, on the other hand, tokenizes customer information each time a payment is made and is useless for any cyber criminals since they cannot use the unique codes to replicate credit cards. Merchants will not need to make major adjustments to their current payment systems to use tokenization, unlike EMV, which will require merchants to purchase an EMV-capable terminal. Tokens are configured in the same way as card information, which will allow merchants to make only minor changes to their payment terminals. 

 

"Tokenization is a very useful solution that can protect cardholder data at many points in the transaction lifecycle, especially post-authorization and for recurring transactions once a card has been presented," spoke Rob Sadowski, director of Technology Solutions for RSA. 

 

Pros of Tokenization
Tokenization has several benefits in the payment industry. Perhaps the most apparent is that it protects cardholder data during a transaction, which prevents cyber criminals from accessing credit card information and using it for fraudulent purposes. 

 

Another great feature of tokenization is that it is implemented to work with the top mobile walletsthat consumer’s use – Apple Pay, Android Pay, and Samsung Pay. None of a consumer’s private cardholder information is linked directly to their phone and is completely hidden from the retailer – only the processing company holds the consumer’s personal banking information. As a result, tokens benefit mobile devices since they signify a consumer’s personal details but withhold them from merchants. These qualities will drastically lessen the chance of fraud from occurring and consumer’s can rest assure their mobile wallet will protect their cardholder information via tokenization.

 

Tokenization technology will make a difference in the future of the payment industry and change how mobile payments are processed.  With enhanced levels of security, tokenization will become a great advantage to stop fraud and data breaches from occurring.