Tokenization: a quick guide

Internet expansion and connected devices have given consumers the freedom to buy at any time of the day or night, in any geography and through a range of payment methods.  It led to an increase in transactions but has also given rise to payment fraud.

Merchants need to get ahead of the curve and deal with e-commerce fraud and chargebacks before they happen. Securing payment processing solutions and card data is crucial to reduce the risk of e-commerce payment fraud. Be warrant that both you and your payment provider experts are PCI DSS (Payment Card Industry Data Security Standards) compliant, and use solutions such as tokenization to protect your business.

Tokenization made simple

You have likely heard this term, but do you know what it is?

It’s a protecting confidential data method that consists of generating random characters – “tokens” – that stand in for valuable data, i.e., cardholder data, Social Security number, usernames and passwords. To say all, it’s pretty much everything that requires confidentiality and security. Although they have no intrinsic value, tokens are of the utmost relevance because they represent priceless information – your customers and yours.

As you can see, tokenization has several characteristics that benefit both consumers and entities, whether companies or financial institutions. Now that we’ve approached the concept, it’s worth having a snap of ​​how it works.

How does tokenization works

When merchants use a payment processor’s tokenization solution, it’s them who receive the string of tokens to de-tokenize and view the original data, retrieve and secure it. Then, they process payment. Another scenario happens when merchants use a third-party tokenization solution: they receive the tokens, de-tokenize, and send it to the payment processor for credit card processing.

What merchants must take into consideration

As mentioned above, securing payment processing solutions and card data are crucial to reduce the risk of e-commerce payments fraud. So, if you have an e-commerce business, it means that you handle with sensitive data, i.e. your customers’ account personal information.

However, despite being essential to electronic transactions and e-commerce, tokenization has associated costs. Hence, merchants must take into consideration some aspects before investing their resources and money:

Partnering with BoaCompra

Whether you are a savvy merchant or you’re just starting your business, it’s most relevant that you have a payment industry expert on your side. BoaCompra is a payment solution expert and provider with more than 15 years of expertise in helping companies grow and sustain their business, giving access to local payment methods and helping to implement security solutions and procedures, such as the PCI DSS and tokenization.