The concept of tokens has been used in the digital world for almost half a century to isolate essential data elements and protect them from disclosure effectively. Recently, tokenization has been used as a security mechanism to protect sensitive data.
When a tokenization software solution is used to protect data effectively, it is not the sensitive data elements that are not actionable; they are the factors that replace the sensitive data elements. Tokens act as credential identifiers corresponding to sensitive data protected by the token system.
Here we look at tokenization at the bank level as it relates to PCI DSS. Such tokenization is ideally suited for maximum protection of sensitive data in banking applications; tokenization is used for credit card transactions, bank accounts, loan applications, and financial statements. To this end, tokenization can effectively prevent personal information from reaching cybercriminals.
Factors That Make Tokenization Different From Encryption?
Things like encryption and tokenization, when implemented correctly, are the most effective ways to protect data. Ideally, it would help if you used both options in a security solution designed to protect your data reliably. Although both methods can save data, each form of data protection differs significantly in performing the given task.
A key difference between encryption and tokenization is that tokenization uses non-mathematical methods to replace sensitive data with less sensitive replacements that do not change the original type or length of the protected data. On the other hand, encryption changes the style and size of data, making this information unreadable in databases and other intermediary systems
Yes, the transferred data is secure and can be processed by older systems, making tokenization a more flexible security method than encryption. Compared to encryption, tokenization typically uses significantly fewer computing resources during processing. Some data is displayed in whole or part for processing and analysis purposes.
On the other hand, protected confidential information is hidden. This ensures faster processing of tokenized data while reducing the load on system resources. Tokenization is optimally used in systems that rely on speed and high performance. Using the services provided by the data privacy company, you can reliably protect personal data using the protection methods you need.
Ways Of Classifying Tokens
There are several ways to classify tokens depending on the level of security required to protect sensitive data. To protect your payment card data, you need to know three types of tokens:
- High-quality tokens (high-value tokens);
- Low-value tokens;
- Security tokens.
High-Value Tokens (HVT), Low-Value Tokens (LVT), and Security Tokens perform entirely different functions when used for payment functions. HVT and LVT are payment tokens and comply with the guidelines of FINMA (Swiss independent financial market watchdog). According to the US Securities and Exchange Commission (SEC) policies, security tokens work in the same way as LVT.
High-quality tokens are a proxy for the Primary Account Number (PAN). These tokens are entirely secure and randomly generated. If a hacker steals this token, the data will be useless because it contains no information about the cardholder. The PAN cannot be retrieved even if the token and the source system are compromised.
HVT also cannot be reconstructed to detect PAN. Low-value and security tokens also act as a proxy for PAN in payment transactions, but unlike HVT, LVT and security tokens cannot be used separately. Each requires matching the PAN they represent, which is done in a highly controlled environment. A tokenization system must be maintained to avoid vulnerabilities compromising the security of tokens that protect PANs.
Tokenization Process And PCI DSS
Any company that processes, stores, or transmits credit or debit cardholder information must protect that information following the Payment Card Industry Data Security Standard (PCI DSS). Tokenization is often implemented in payment systems to meet obligations to protect stored credit card data.
Tokenization replaces credit card and ACH (Automated Clearing House) numbers with random strings or values. The token usually consists of the last four digits of the card number. When processing a payment card authorization request, a transaction authorization code token may be returned to the merchant instead of the actual card number.
The token is then stored in the receiving system. However, the actual cardholder data is mapped to this token, thus becoming protected by a secure token system. Token and payment card data storage systems must comply with PCI DSS requirements.
Elements Of The Tokenization System
Common ways to generate tokens include:
- A mathematically reversible cryptographic function based on a known reliable cryptographic algorithm and cryptographic key;
- One-way irreversible cryptographic functions, such as hash functions with secrets;
- Randomly generated numbers (not derived mathematically from the PAN) are generated using index functions or sequence numbers.
This is the stage of assigning the token its initial PAN value. When PANs are processed for tokenization, the PAN and the tokens it generates are often securely stored in the card’s data store. This allows you to get a specific PAN or token depending on the type of application and implementation of your solution.
Card Data Storage
The Card Data Vault is the central repository of PANs and their tokens in the tokenization system. This is used to display tokens efficiently. This component contains PANs and tokens, making it a key target for cybercriminals.
Management Of Encryption Keys
The processes of creating, using, managing, and protecting cryptographic keys used to protect PAN data are classified as cryptographic key management. Managing and securing these keys following current PCI DSS requirements is essential. A cryptographic key management tokenization solution refers to keys used in cryptographic PANs and all keys actively used for token generation.
Tokenization solutions can be implemented in entirely different ways. Generally, tokenization and detokenization should only occur within clearly defined tokenization frameworks. This system shall include a process for sending tokenization and tokenization requests by authorized applications.
Security Issues Of Tokenization
Security considerations for tokenization systems include:
- Segmentation of all networks, users, applications, processes, and system components beyond PCI DSS;
- Limiting access to authenticated users and components of the tokenization system. When evaluating a tokenization solution, the following authentication elements should be considered: identification, connection, authentication, authorization, termination, and technical support process;
- Comprehensive monitoring that monitors, controls, and records all accesses and actions that occur in the tokenization system following PCI DSS requirements;
- A mechanism that distinguishes tokens from genuine PANs, allowing merchants or service providers to determine whether their tokenization system is working correctly;
- Compliance with PCI-DSS requirements for storing, processing, and transmitting cardholder data in a fully PCI-DSS compliant tokenization system.
Correctly implemented tokenization systems at the bank level effectively protect confidential payment card data reliably.
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