By Prashanth GJ, CEO at TechnoBind
The use of tokens in the digital world means replacing sensitive data with a non-sensitive digital equivalent. In the simple term, it replaces all the sensitive data, such as credit card numbers, with unique identification data while retaining all the essential information about the data. The tokenization of bank card transactions is not new to us. It has already been a norm in the card payments industry in many international markets. Digital tokenization was first introduced by TrustCommerce in 2001 as a means of protecting credit card information. In the recent past, the Reserve Bank of India allowed tokenization of debit, credit and prepaid card transactions to enhance the safety of the digital payments ecosystem in the country.
A lot of e-commerce websites and other payment sites ask customers to save card information for faster checkout and also reduces chances of transaction failure due to incorrect payment details. So far, any business that was storing card details for future transactions had to be PCI (Payment Card Industry Council) compliant which is challenging for many small businesses. Before the introduction of tokenization, merchants store sensitive credit card information on their own servers, which means, anyone with access to the system could view potentially sensitive information. There are many reasons why tokenization matters to businesses like, it reduces risk from data breaches, helps foster trust with the customers, last but not least, it drives payment innovations.
“Tokenization may sound complicated, but its beauty is in its simplicity. It makes the process of accepting payments easier and more secure. Tokenization is more than just a security technology and helps to create much smooth payment experiences and satisfied customers. It also reduces risk from data breaches, helps foster trust with customers, minimizes red tape and drives technology behind popular payment services like mobile wallets.” said, Prashanth GJ, CEO at TechnoBind “Although no technology can guarantee the prevention of a data breach, a properly built cloud tokenization platform can prevent the exposure of sensitive data, stopping attackers from capturing any type of usable information-financial or personal”.
Prashanth, further said, “The world now firmly in the digital age. Digital payments were on the rise well before the start of COVID-19, but the impact of remote working has catapulted a massive shift to digital around the world. Nowadays people are much connected to the online and the market is rapidly increasing digitization. From the basic needs to the utmost luxuries, our lifestyle is now impacted by the internet and hence, there are many advantages of maintaining information in digital form, including ease of search, and of course cutting down on the overhead of storage space. But one needs to understand that no data is safely stored digitally. Information stored in data banks is often protected by some form of security solutions, but each of these data banks is subject to breach, whether due to human error or cybercriminal attacks.”
According to the Juniper Research, Mobile Payment Data Security: Tokenization, Encryption & Regulation 2020-2024, found that the ability to use standard tokens and multifactor authentication protocols through Secure Remote Commerce will increase the use of such security measures in browser-based commerce, whereas previously it was mostly limited to native apps. The report notes that this will be aided by 3D Secure 2.0 standards, which become mandatory for most payment networks worldwide. As a result, Juniper Research believes virtually all remote payments will be tokenized by 2024, along with all Near Field Communication-based payments.