The digital payments landscape is ever-evolving, with innovations propelling us into a future where transactions are swift, seamless, and most importantly, secure. In this dynamic environment, Tokenisation has emerged as a key security method that not only bolsters security and data protection but also plays a crucial role in streamlining digital transactions.
In this blog, we’ll delve into the different types of tokenisation, its benefits, and how payment orchestration with Paydock works with tokenisation to ensure the efficiency and security of digital transactions.
What is Tokenisation?
Tokenisation is a security method that protects user data by replacing the sensitive Primary Account Number (PAN) found on debit and credit cards with a token. Instead of processing and storing actual credit card data during transactions, tokenisation replaces this sensitive data with unique characters or “tokens”. This means when a customer shops online, their real card details stay safely tucked away, and only the token is exchanged without exposing any sensitive data.
Who does it benefit?
- Merchant: An extra layer of security, ensuring sensitive customer data is replaced with a unique token. This enhances authorisation rates and reduces fraud in the case of network tokens, ultimately benefiting both the merchant and customers.
- Customer: Peace of mind knowing their payment information isn’t stored in its raw form, reducing risk.
Types of Tokenisation
Tokenisation isn’t a one-size-fits-all solution. There are various types of tokens, each with its own unique characteristics.
Payment Gateway Tokens: These tokens replace the PAN at a specific point during the customer journey and they hold significance for the token provider, gateway provider and the merchant. They are used in the early stages of the transaction and are invisible to the card issuer’s bank.
Network Tokens: Going a step further, network tokens can be used throughout the entire checkout process, from the merchant to the end issuing bank. They replace the PAN across the entire payment ecosystem, offering a more secure option. Additionally, network tokens are more flexible. As the issuing bank creates them, they can be used for multiple payment gateways across the entire payment ecosystem. This can make them a more attractive solution to merchants who can access a greater number of potential customers.
Vault Tokens: These tokens utilise secure databases to store users’ card data. When vault tokens are issued, they access data securely through the vault database. Alternatively, vaultless tokenisation types generate tokens through algorithms. Vault token orchestration services offer convenient maintenance, allowing you to update data, such as card expiry dates.
What are the benefits of Tokenisation?
Simplified Compliance Obligations
There are strict regulations in place to ensure sensitive payment data is stored securely. This includes the need to maintain a PCI-DSS Level 1 certified environment. However, these requirements can be simplified by using an orchestration platform for your tokenisation infrastructure. Working with an orchestration platform like Paydock can alleviate the burden of compliance obligations, without losing control of customer card/debit data in the process.
Seamless Checkout Experience
When a customer’s payment information is tokenised, they don’t need to re-enter their credit card details for each purchase. This significantly speeds up the checkout process, as the tokenised data can be securely and instantly retrieved for payment.
Enhanced Customer Insights
Furthermore, when utilising customers’ saved payment information, merchants can monitor their buying activity in relation to their customer profile. This allows them to accumulate valuable, customer-specific business data.
Increased Conversions
Using vault and network tokens will likely lead to increased conversions. Future and repeating transactions can be completed effortlessly as customers don’t have to input their card details again and just need to authorise purchases through the issue of new tokens.
Reduced Administrative Costs
Tokenisation can significantly reduce administrative overhead by minimising the reliance on manual data entry and verification. This can result in time savings, lower labour costs, and a decrease in errors, all of which contribute to operational efficiency and cost reduction. Additionally, it’s worth highlighting that schemes may apply extra fees to transactions if they are processed with raw card data and not network tokens, underscoring the financial advantages of network tokenisation.
Minimised Risk of Fraud
Network tokens can eliminate the risk of fraudulent transactions since the card undergoes verification by the issuing bank before the token is created. Furthermore, network tokens automatically update when there are changes to the card such as the PAN or expiry date ensuring ongoing security and convenience.
Card Lifecycle Management
Network tokens automatically update when there are changes to the card such as the PAN or expiry date ensuring ongoing security and convenience.
Tokenisation with Paydock's Orchestration for a Secure Ecommerce Future
Businesses can securely store credit card details in our PCI-DSS-compliant vault and return them with a special Paydock vault token. This can be routed, updated and charged without exposing sensitive data. All sensitive information, such as cardholder data, is managed in the vault, using multiple encryption keys with split knowledge and dual control.
Paydock offers the capability to create a single token that can be used for different payment gateways in your ecosystem. Utilising a single token for a range of gateways (such as MPGS, Stripe and Cybersource), can simplify and optimise payments system, offering a future proof solution that adapts to your evolving needs, while maintaining the highest standards of security and operational efficiency.
Migrate pre-existing tokens to the Paydock solution
With Paydock’s token migration solution, merchants can transfer pre-existing tokens to the Paydock ecosystem. This allows them to benefit from a comprehensive range of payment management features from our centralised platform, providing a simplified way to track and trigger transactions and maximising the security of their data with Paydock’s robust security measures and compliance standards.
Tokenisation: A frontrunner for payments security
In essence, tokenisation has become a paradigm shift in how we handle and secure financial data. By working with a payment orchestration platform like Paydock, businesses can seamlessly integrate tokenisation into their payment ecosystem, significantly reducing the risk of data breaches. This alliance not only reinforces data security but also streamlines the entire payment process ensuring that sensitive data remains well-protected throughout each transaction and the card’s lifecycle.
As merchants continue to seek ways to marry innovation with security, tokenisation emerges as a frontrunner, promising a future where both merchants and their customers can transact with peace of mind.
