Credit Card Tokenization: An Option For Compliance

Credit card tokenization is a cost effective means to help companies achieve PCI compliance without having to invest in expensive hardware and software installs or upgrades. On-site storage can make your business a target for criminal attempts to break into your system. An efficient remote storage system, however, can simplify the process of becoming PCI compliant and keeping your customers' information safe.

Credit card tokenization is an efficient way to handle your company's payment processing needs without having to make any sweeping changes to your current business practices. The process is fairly simple. In its most basic form, tokenization is merely the process of replacing a credit card number with a unique ID.

In actuality, there's a little more to it. The entire process is based on the idea and universal truth that a criminal cannot steal from you what you don't have. It's very philosophical, and it works like this:

A credit card or debit card is used by a customer in a transaction at a retail outlet or a card-not-present transaction over a network or the Internet. Initially the data is sent to the company providing the credit card tokenization who, in turn, generate and return a unique and random 16 digit ID number to the merchant.

The implicit benefits here are that this randomly generated number is the only thing a merchant needs to store on their system. This number is useless to any criminals that might breach your system, but still helps you effectively process payments. A merchant can use these tokens to initialize repeat transactions or to change and/or delete records.

How does this help you achieve PCI compliance? The PCI DSS was created by the five major credit card companies to help maintain the integrity of electronic transactions. As such, many of the requirements state that you must do everything possible to protect cardholder data. But sometimes conventional security measures just aren't enough.

The third requirement of the PCI DSS states that a merchant must "Protect cardholder data." On the surface that seems like a very broad and generalized requirement. But it is a very important step toward implementing sufficient security.

Data encryption is one of the major components of this requirement. Any data stored on a system must be encrypted so a criminal can't do anything with it unless they manage to get a hold of the encryption key. And therein lies the problem. There's always a way for a criminal to circumvent conventional security measures. The only way to prevent it is constant monitoring and management of the sensitive data.

Unfortunately, most companies don't have the resources or time to devote to that kind of consistent management. And even if they did, there are even more requirements governing exactly what they need to do to detect, prevent, and react to any security breaches.

This is one of the other benefits of credit card tokenization. When you delegate these responsibilities to a remote, secure site, that company should have the resources necessary to properly manage the security on their system. After all, their business depends on their ability to do just that.

The PCI DSS requires that any company that stores, processes or transmits sensitive credit card data must comply with a certain level of security measures. The process is necessary for both merchants and consumers, but it can be a long and expensive undertaking. Credit card tokenization, however, can help you achieve compliance quickly and efficiently. This means your business will be protected from malicious criminal attacks, and your customers will know that they can trust you.

Andy Eliason is a writer at Main10, Inc. If you'd like to learn more about credit card tokenization, or becoming PCI compliant, visit Braintree Payment Solutions today.