Secure Your Payment Transactions With Tokenization

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tokenization

When establishing a business, finding the right merchant services provider is paramount. So is securing your transactions, especially in the age of recent credit card data breaches. There will likely never be a failsafe method of securing credit card data from hackers, but tokenization might be the strongest defense yet.

 

Tokenization Endorsed By Experts at Transact 14

Tokenization, basically defined as the substitution of data, was among the recurring themes at the (http://blog.instabill.com/instabill-exhibit-eta-transact-14-conference/) |ETA Transact 14 Conference| in Las Vegas Apr. 8-10. Among the other omnipresent themes was EMV technology and several experts affirmed the two could be the best defense in the escalating war against credit card data hackers.

EMV technology is expected to replace the magnetic stripe on credit cards in the U.S. within five years and the four major credit card companies – MasterCard, Visa, American Express and Discover – are in the process of conversion. The companies’ efforts, the result of the recent credit card data breaches, are commendable, but outspoken critics of EMV technology at Transact 14 emphasized that the adoption of tokenization must also happen.

What is Tokenization and How Does it Work?

As a child, I spent too much time in the local mall feeding quarters into video games such as Asteroids, Galaga and many others. Nowadays, most local arcade machines no longer take quarters, only tokens, which have no monetary value other than to give a child 5-10 minutes worth of play on a video game.

The theory behind tokenization of payments is the same: It is the use of a substitute value, or token, in place of the data that has value. This way, if a system using tokens is compromised, it is the tokens that are stolen, not the actual valuable data. Tokenization in a credit card transaction works like this: A merchant swipes the consumer’s credit card, and the 16-digit number immediately is recorded in the merchant database. Tokenization converts the 16-digit number into another, radically different 16-digit number. The mapping of the original 16-digit number is maintained in a secure database.

If hackers make their way into the merchant database, they can only see the token 16-digit numbers that are useless. “EMV is not the ‘silver bullet’ but it can be effective if it is used with tokenization,” said Andrew Henwood, CEO of data forensics firm Foregenix in South Africa. “It is very effective in a card-present environment.”

One Last Thing: Protect Your Database

With tokenization, it is essential that your database is secure. It is important that reversing the mapping to retrieve the original data, the 16-digit number, should be done as infrequently as possible. The fewer times that tokens are converted back to their original data, the more valuable tokenization is.

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Dylan Freni is the web content writer for Instabill, an international merchant services provider. Dylan writes articles for the company’s nine websites, including three articles per week for the Instabill blog. Frequent topics include merchant services, payments industry news, e-commerce tips, and merchant account how-to’s. Instabill has been providing merchant accounts for merchants worldwide since CEO Jason Field started the company in 2001. As an industry-leader in merchant services, Instabill caters to low-high risk businesses around the world. With their large network of offshore and domestic bank partners, Instabill offers merchant accounts to e-commerce, retail, MOTO, and mobile businesses. Through their blog, the company also informs merchants about the latest industry news and e-commerce trends to help them improve their business. Instabill is located in Portsmouth, New Hampshire, USA.

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