What is Tokenization?
One of the major payment trends of the last decade, Tokenization, is a process that’s becoming more and more popular in the online payment landscape. Tokenization is the process of turning sensitive data into non-sensitive data, which are called tokens.
How does Tokenization work?
Generally speaking, Tokenization will make use of an algorithm to change a consumer's payment details with a completely randomly generated sequence code. For example, credit cards' primary account numbers are replaced with those numbers, or token, which can then be used to carry out the payment in a webshop. The key here is the token and knowing what payment details it corresponds with, which is safely stored in the token vault.
Tokenization basically creates an additional security layer, in turn this results in an overall safer environment to house sensitive data.
The goal of Tokenization
Tokenization’s main goal is creating a safer way to store important data. By removing the original sensitive data, your consumers can rest easy, knowing that their payment data cannot be stolen by cybertheft.
The added benefit Tokenization brought along with it is the use of tokens in checkout procedures, which led to a significant boost in checkout speeds. Not having to enter all your payment details in order to purchase something has resulted in some very useful checkout innovations, such as Magento Instant Purchase for Magento 2.
Tokenization is a feature that should help the majority of businesses create a more secure payment ecosystem. If your business handles a lot of recurring transactions, Tokenization is especially suited to your business, and the same goes for credit cards.
What are the advantages of Tokenization?
Reduce your risk (and consequences) of a data breach
Storing credit card data without Tokenization is asking for a major data breach, and when it happens - the consequences will be grave. If it happens and you're using Tokenization to process payments where possible, the results will be significantly less damaging.
Boost your checkout speed through one-click
By storing payment details in a secure way, your consumer will be able to use their token to pay with just one click. Boosting your conversion and checkout speed.
Show your consumers you are trustworthy
Safety has become increasingly important in ecommerce. Showing your potential clients that you use Tokenization to keep their data safe will help in convincing your website visitors to purchase with you.