What is Tokenization?

Tokenization is a hot topic in the financial industry right now. Here we will discuss what it actually means and how it can benefit your business. Tokenization is important because it reduces risk by replacing a card account number with a unique digital identifier called a token, which has no meaning outside of its intended use. Tokens are used in place of the card number on a payment system, protecting the sensitive card data from exposure and reducing potential liability for business owners.

Tokens are not just randomly generated numbers that have no meaning. In fact, tokens use the same cryptography as credit cards to ensure that they can only be used once, making them very difficult to counterfeit or copy.

All of this is done without sacrificing the convenience and security of card payments. Tokenization makes it possible for businesses to process card payments without having to store or handle the card number themselves, which greatly reduces their risk of data theft or fraud.