Tokenization And Pci Compliance

With the threat of security breaches and identity theft a major concern for both

credit card merchants and credit card holders, the need to secure personal information during credit card transactions has become crucial to protecting consumers and businesses. Payment processing security features include address verification systems, card verification value codes, and other fraud prevention tools that help merchants detect fraudulent activity and keep their customers' information safe. Tokenization is a security measure that keeps credit card numbers safe while reducing business liability. Below, learn about tokenization and PCI compliance, and what these terms mean for consumers and merchants.

What is Tokenization?:

Tokenization refers to a technology that protects credit card numbers by replacing them with a coded reference pointer, or token, during transactions. This feature intercepts normal credit card processing by substituting the real information with the token, and then continues on with the process using that token. Tokenization prevents credit card theft by taking the credit card number completely out of the process and instead, uses a token that is useless to hackers and identity thieves. The real credit card information is deleted, meaning that merchants never store customers' actual information.

What is PCI Compliance?:

The use of tokenization security features within the credit card transaction process is another step toward PCI compliance. Credit card companies formed the PCI (Payment Card Industry) Security Standards Council to instill a set of standards and rules regarding how merchants store and process sensitive data. These regulations are put in place to keep consumers' and business' information safe and to reduce the risk of credit card fraud. Standards not only stress the need to practice secure transaction processes, but they also inform merchants on the steps to take in order to become compliant. Businesses that do not comply with PCI standards risk losing their integrity and customers, in addition to paying hefty fines that can have a negative impact on business. Keeping credit card information safe through PCI compliance ensures a company's reliability and helps increase credit card security.

Benefits for Credit Card Holders and Merchants:

Credit card holders benefit from tokenization and PCI compliance because they can make their purchases, whether in-store or online, with the assurance that the seller is keeping credit card information safe. When tokenization is put into play, their credit card information becomes nothing more than coded data that, if stolen, is useless to identity thieves and hackers. Merchants benefit from tokenization and PCI compliance by establishing their business as a trustworthy source. Because tokenization takes the credit card number out of the process and stores a token instead, the merchant never actually has access to the customers' credit card information. This reduces business liability and keeps businesses safe.

by: Julie Henaghan

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