Tokenization substitutes sensitive data with unique, randomized tokens without a mathematical relationship to the original information. These tokens retain specific attributes, such as length or format, allowing seamless integration into existing systems and processes without disrupting business operations.
The true power of tokenization lies in its ability to remove sensitive data entirely from an organization's internal environment. Partnering with a trusted third-party tokenization provider allows businesses to securely store the original data offsite, eliminating the risk of exposure within their systems.
A token is a nonsensitive piece of data that acts as a stand-in for valuable information, such as credit card numbers or Social Security numbers. Tokens hold no inherent value on their own; their purpose stems from their representation of something valuable.
Consider the analogy of a poker chip. Instead of risking cash on the table, players use chips as placeholders. Even if these chips are stolen, they cannot be redeemed for their monetary value without being exchanged through the proper channels. Similarly, tokens serve as placeholders for sensitive data, rendering the information useless to potential attackers.
Read more: Is token-based authentication HIPAA compliant?
When a business partners with a third-party tokenization provider, a four-step process is initiated to ensure the security of sensitive data:
The process effectively eliminates the presence of valuable information within an organization's systems, reducing the risk of data theft and ensuring compliance with industry regulations.
Tokenization serves to safeguard sensitive data while maintaining its business utility. Unlike encryption, where data is modified and rendered unusable for operational purposes, tokenization allows organizations to continue using the tokenized data for various activities without compromising security.
Moreover, tokenized data cannot be reversed or decrypted, as there is no mathematical relationship between the token and its original value. Such a distinction is fundamental because a breach of a tokenized environment will not expose the original sensitive information, providing an unparalleled level of security.
Read also: What is encryption?
Implementing tokenization offers businesses several benefits:
One of the most common applications of tokenization is the protection of cardholder data. When a customer initiates a payment transaction, the token stored in the business's systems is swapped with the corresponding primary account number (PAN) by the original tokenization system, and the PAN is then sent to the payment processor for authorization. The process ensures that the business's systems never record, transmit, or store the actual PAN, reducing the risk of data exposure.
While no technology can guarantee the complete prevention of a data breach, a properly implemented and maintained tokenization platform can effectively prevent the exposure of sensitive data, rendering any stolen information useless to attackers.
Furthermore, according to Medical Economics, “As health care becomes increasingly retail-like, patients will expect – and even demand - that their providers deliver the secure, seamless, and convenient digital payment experiences they have grown accustomed to in other industries. Payment tokenization technology plays a prominent role in enabling providers to fulfill this growing patient expectation.”
Tokenization offers a versatile and secure framework for various industries:
Related: How to de-identify protected health information for privacy
While tokenization is designed to be an irreversible process, there may be instances where businesses need to retrieve the original sensitive data. Detokenization, the reverse process of exchanging the token for the original data, comes into play in such situations. Only the original tokenization system can perform detokenization, ensuring that the sensitive information remains secure and inaccessible to unauthorized parties.
Encryption and tokenization are two related data protection technologies that have distinct differences. Tokenization involves substituting sensitive values with tokens, which are similar-looking but have different values, to preserve the data's format. On the other hand, encryption converts data into gibberish that looks drastically different from the original.
While both encryption and tokenization serve as forms of data protection, tokenization focuses on preserving the format of the data. In contrast, encryption stresses transforming the data into an unrecognizable form.
The ultimate goal of an effective tokenization platform is to eliminate any original sensitive data from an organization's systems, replace it with indecipherable tokens, and securely store the original data in a separate, offsite environment. This data-centric approach to security adheres to the principles of ‘zero trust,’ where no entity, whether internal or external, is inherently trusted with sensitive information.
While tokenization is not a security system designed to prevent network breaches or system infiltration, it represents a proactive measure to render any stolen data unusable and worthless to cybercriminals. Adopting this mindset helps organizations mitigate the risk and impact of data breaches, protecting both their customers' sensitive information and their own reputation.
Yes, tokenization can be an effective solution for organizations subject to the Health Insurance Portability and Accountability Act (HIPAA). By tokenizing protected health information (PHI), healthcare providers and entities can reduce the risk of data breaches and ensure compliance with HIPAA's stringent data security and privacy requirements.
In the healthcare industry, tokenization secures sensitive patient data, such as medical records, insurance information, and personal identification details. Tokenizing this sensitive information helps healthcare organizations protect patient privacy, reduce the risk of data breaches, and maintain compliance with industry regulations like HIPAA.
Tokenization can be applied to various types of sensitive data, including:
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