What Is Tokenisation?
Tokenisation is a process in which sensitive data, such as payment card information or personally identifiable information (PII), is replaced with a unique identifier called a token.
This token retains no intrinsic value or meaning and is used to represent the original data securely. It is widely employed in the context of payment transactions, cybersecurity and data protection.
How Does Tokenisation Work?
It involves multiple steps:
- Data Collection: Sensitive data, like credit card details, is collected during a transaction.
- Token Generation: A token, which is a unique string of characters, is generated to represent the sensitive data. The token is unrelated to the actual data and has no inherent value.
- Storage Or Transmission: The token is used in place of the original data during storage or transmission. If intercepted, the token is meaningless and cannot be used maliciously.
- Detokenisation: It is the process in which a token is detokenised to retrieve the original data for authorised use.
What Is Tokenisation Of A Card Transaction?
In the context of card transactions, tokenisation involves replacing the actual credit card details with a token. This token is then used for processing the transaction, thereby reducing the risk associated with storing or transmitting sensitive payment information.
In 2022, the Reserve Bank of India (RBI) made it mandatory for all credit and debit card data used in online, point-of-sale and in-app transactions to be replaced with unique tokens as a measure to enhance user security and improve digital payment experience.
Benefits Of Tokenisation
- Enhanced Security: Tokens are meaningless to potential attackers, which reduces the risk of data breaches.
- Risk Mitigation: Even if tokens are intercepted, they cannot be used to derive sensitive information.
- Compliance: Tokenisation aids in meeting regulatory requirements and industry standards such as PCI DSS (Payment Card Industry Data Security Standard).
- Streamlined Transactions: Tokenisation can speed up transactions by eliminating the need to transmit or store actual sensitive data.
- Drawbacks Of Tokenisation
- Complex Implementation: Implementing tokens can be complex and may require significant infrastructure adjustments.
- Cost: Initial setup costs and maintenance expenses may be incurred in implementing this system.
What Is Detokenisation?
Detokenisation is the process of converting a token back into the original, meaningful data. This is typically done when the original data is required for authorised purposes, such as transaction processing.
What Is The Difference Between Tokenisation And Encryption?
Tokenisation replaces sensitive data with a non-sensitive token, which has no intrinsic value or meaning. Tokenisation does not involve complex algorithms, making it less susceptible to decryption attempts.
Encryption involves the use of complex algorithms to encode sensitive data, making it unreadable without a proper decryption key. While encryption adds a layer of security, the data remains in a readable format if decrypted.
What Is Card-On-File Tokenisation?
Card-on-file tokenisation involves securing card details stored by merchants for recurring payments or subscription services. Instead of storing actual card information, merchants use tokens to represent the card, reducing the risk associated with storing sensitive payment data.
Can Tokenisation Be Used To Make Data Anonymous?
Tokenisation itself does not make data anonymous, it rather replaces sensitive data with tokens. However, if combined with additional anonymisation techniques, such as data masking or generalisation, tokenisation can contribute to making data more anonymous. The level of anonymity achieved depends on the specific methods employed in conjunction with tokenisation.
