How Tokenization is Changing the Payment Card Model

15 Aug
2013

Working with credit cards isn’t as straightforward as it would seem. For merchants, the payment credit card data model can be frustrating and difficult, and also a source of huge unforeseen costs. However, there is a technology that can help manage these difficulties and give you back a measure of control: tokenization.

credit card data modelFor an example, consider payment processing. In the traditional credit card data model, merchants have to sign a contract with a credit card processor – a bank, processing company, or so on – that manages the credit card payments. Payment processing contracts can be confusing and full of hidden fees and requirements, and even big businesses can be taken off-guard by their stipulations.

As an added headache, many payment processors have regulations concerning the kind of data security you must use in your system. These processors often supply their own security solutions as well, but these security systems are often proprietary and designed to “lock you in” with a particular payment gateway.

Which brings us to tokenization. When you use a tokenization provider for data security, we put ourselves between you and the payment processor in the system. We then remove all of the sensitive information from your systems – credit card numbers, personally identifiable information, and anything else you need to secure – and replace that info with tokens.

The tokens themselves are just random pieces of data that serve as placeholders for real values in your records. That way, when you want to make a transaction, you pass the token along to the tokenization service. Then, the service matches the token with the sensitive value (up until now, safely secured in a data vault), and then gives that to the payment processor on your behalf.

Why is this good for you? First, you’re no longer locked into using particular providers based on your data security system. Tokenization can work with any environment and any payment processor, so you’re free to find the best deal, or even change processors if you want. Your business, and your customers, won’t even notice the change.

Second, you remove a heaping pile of risk from your own system. Because tokenization involves removing sensitive data from your files, that data is no longer in scope for your PCI compliance obligations or data security needs. The tokens that you keep are valueless, and even the PCI Council recognizes that they pose no security threat.

In short, tokenization is a huge upheaval in the way merchants can organize their business. You no longer need to worry about data security or getting bullied by payment processors. With tokenization, you’re truly in control of your own systems.

TokenEx is a leading provider of tokenization-based data security systems. If you want to learn more about our solutions for merchants, contact us today or visit our website to learn more.