What is Tokenization?

Tokenization is the procedure that creates randomized tokens (individual words, phrases, or complete sentences) for use in other applications, such as data mining.

Tokenization is an important aspect of business and data transactions because it essentially renders private customer information meaningless to potential invasions. In an era where more business is being conducted online, tokenization protects users on a given network, keeping customer information private and unusable to outsiders.

Encryption, Tokenization, and Anonymization for IBM i: A Quick Guide to Protecting Sensitive Data


Why Businesses Use Tokenization

When businesses use tokenization, they protect private customer data from exposure via breach.

The purposes of tokenization are twofold: 

  1. Replace sensitive data with a token so that if the server is breached, the data is not there to be stolen — it’s elsewhere, in a token vault

  2. Remove a server from the scope of compliance. If a server's sensitive data has all be moved elsewhere, it's not subject to compliance regulations.

The industry-mandated shift to Europay, Mastercard and Visa (EMV) smart cards is a successful step toward better privacy protection for users and includes best encryption practices including tokenization for security.

Cybersecurity regulations such as PCI DSS require protection of consumer data. Tokenization is a vital component to meeting compliance. 

How Precisely Can Help

Precisely is an industry leader in data tokenization and database encryption products, replacing specific fields of data (credit card numbers, social security numbers, drivers licenses numbers, e.g.,) with substitute values. The original data is stored in a token vault and can only be retrieved using the token. 

Learn more about Assure Encryption