Key Takeaways
- Vaultless tokenization replaces sensitive data with secure tokens, keeping raw details out of business systems without relying on a centralized vault.
- Because vaultless tokenization does not rely on a central database lookup, it can process large volumes of tokens more quickly and efficiently.
- Vaultless tokenization can support PCI DSS scope reduction when implemented correctly so downstream systems use tokens instead of sensitive data.
- Organizations often use vaultless tokenization alongside encryption for layered protection against unauthorized data exposure and theft.
Customers today have high expectations. They might buy a pair of shoes online but want to return them in store, or sign up for a long-term subscription that automatically charges the same card every year. In these cases, businesses need to not only collect sensitive information, but also keep it reusable across multiple systems over time.
That comes with a security challenge. The more places a business stores sensitive data, the more places it has to secure. The longer the data is stored, the more opportunities there are for it to be exposed.
Vaultless tokenization offers a way out of that tradeoff. It lets organizations work across business systems without exposing the original values and without relying on a centralized token vault that attackers can target.
What Is Vaultless Tokenization?
Vaultless tokenization is a data protection method that allows businesses to use sensitive data without spreading the original data across their systems or storing it in a central vault.
Tokenization replaces sensitive data – such as credit card information, personally identifiable information (PII), protected health information (PHI), and bank account details – with a non-sensitive substitute called a token. Businesses can use those tokens in downstream systems instead of the original data to reduce the number of systems subject to the Payment Card Industry Data Security Standard (PCI DSS), which defines security requirements for organizations that store, process, or transmit payment card data.
Some tokens are designed to preserve the format of the original data. With format-preserving tokenization, a token maintains the original value’s length and structure. For example, a 16-digit credit card number may remain 16 digits, but the new digits have no exploitable relationship to unauthorized parties without the tokenization system and keys.
Organizations can also use deterministic token generation, which means the same piece of data produces the same token each time. This allows a returning card or customer to be recognized without exposing the original data.
In traditional – or vaulted – tokenization, the original data and its relationship to the token are stored in a centralized token vault. Vaultless tokenization, in contrast, uses secure cryptographic methods to create and manage tokens without the need for a vault.
How Does Vaultless Tokenization Work?
The vaultless tokenization process involves four key steps:
Step 1: Sensitive Data Is Captured
First, the organization receives sensitive information through a payment terminal, online form, call center, or other channel.
Step 2: The Data Is Tokenized Using Cryptographic Algorithms
A cryptographic algorithm – a set of mathematical rules designed to protect data – transforms the sensitive information into a token.
Step 3: No Token Vault Is Required
The vaultless tokenization system’s cryptographic algorithm is controlled by keys, which are essentially secret strings of data. These keys are typically protected in a dedicated key-management system or hardware security module. Safeguarding a limited set of keys can significantly reduce risk, compared to safeguarding large volumes of sensitive data and payment account number-to-token mappings in a centralized vault.
Step 4: Authorized Systems Can Access Data Securely
When needed, the organization can access the original data through controlled detokenization – the authorized process of converting a token back into the sensitive data it represents using cryptographic keys and access controls.
Vaultless Tokenization vs Vault-Based Tokenization
The main difference between vaultless and vault-based tokenization has to do with how the system connects a token to the original sensitive data.
In vault-based tokenization, the original data and its relationship to the token gets stored in a central database called a token vault. When the original data is needed, the system looks up the token in the vault and retrieves the corresponding number.
Vaultless tokenization eliminates that lookup database. Instead, cryptographic algorithms and protected keys are used to both generate tokens and retrieve the original data as needed.
| Area | Vault-based tokenization | Vaultless tokenization |
|---|---|---|
| Token creation | The system generates a random token to replace the original value, then stores a record linking the two in a centralized token vault | The system uses a cryptographic algorithm and protected key to transform the original value into a token |
| Original data retrieval | The system looks up the token in the vault to find the original value | An authorized system uses the cryptographic process and correct key to restore the original value |
| Performance and scalability | Database lookups can create delays or bottlenecks at high volumes | No database lookup is required; supports faster processing and easier scaling |
Why Organizations Use Vaultless Tokenization
Reduce Sensitive Data Exposure
By replacing sensitive values with tokens before they enter downstream systems, organizations can limit the movement and storage of sensitive data.
Eliminate the Token Vault as a Target
Vaultless tokenization eliminates the need for a centralized token vault, which can be a high-value target for attackers.
Improve Scalability and Performance
With no vault-checking required when a token is created, verified, or retrieved, vaultless tokenization avoids bottlenecks that can come with centralized lookup processes.
Support Compliance Requirements
Tokenization can help reduce PCI DSS scope, support HIPAA-aligned security programs, and meet privacy obligations by minimizing how much cardholder data, PHI, or PII is exposed across systems.
Does Vaultless Tokenization Reduce PCI Scope?
Vaultless tokenization can help reduce PCI DSS scope if cardholder data is tokenized before it enters downstream systems. Any system that receives or transmits a primary account number (PAN) before it is tokenized can still fall under PCI scope.
Vaultless Tokenization vs Encryption
Vaultless tokenization and encryption both help protect sensitive data, but serve different purposes.
Encryption
Encryption protects sensitive data by transforming it into unreadable ciphertext. The original data is still present, but can only be read if the encryption is reversed with the correct decryption key.
Vaultless Tokenization
Vaultless tokenization uses cryptographic algorithms and protected keys to replace sensitive data with a token that has no usable relationship to the original value.
Why Organizations Use Both
Many organizations layer encryption, which protects data during storage and transmission, with tokenization, which reduces sensitive data in downstream systems.
Where Is Vaultless Tokenization Used?
Common uses for vaultless tokenization include:
- Payment processing: Payment systems use tokens to process transactions without exposing usable payment credentials.
- Healthcare payments: Tokens reduce the exposure of raw payment data across healthcare systems.
- Patient portals: Payment, PII, or PHI entered through digital portals can be tokenized to keep sensitive information protected.
- Recurring billing: Tokens support repeat payments without retaining raw cardholder data in billing platforms or customer accounts.
- Financial services: Account numbers and other sensitive financial data remain protected even as information is shared across systems.
- Ecommerce: Tokens can be used to process purchases and refunds without exposing sensitive data.
- Customer databases: Sensitive identifiers are replaced with tokens so teams can work across systems without requiring access to the original data.
How Bluefin Uses Vaultless Tokenization to Protect Sensitive Data
By offering vaultless tokenization as a service, Bluefin helps organizations protect sensitive data while still meeting operational and compliance demands.
Replace Sensitive Data With Secure Tokens
Bluefin’s vaultless tokenization is designed for use with everyday business systems. The same token can be created for the same customer or payment card each time to support recurring billing, customer service, reporting, and other workflows without exposing the original sensitive data.
Reduce Sensitive Data Exposure Across Systems
With Bluefin’s vaultless tokenization, fewer business systems need to store, process, or transmit the original data. Should a downstream system get breached, the attacker can retrieve useless tokens, but not raw PAN, PHI, PII, or ACH information.
Support PCI Scope Reduction Strategies
When combined with Bluefin’s PCI-validated point-to-point encryption (P2PE), organizations can protect cardholder data from the point of interaction and reduce exposure across systems to simplify PCI DSS compliance efforts.
Secure Sensitive Data With Bluefin Vaultless Tokenization
Vaultless tokenization helps organizations move beyond protecting sensitive data after it enters their environment. By replacing sensitive information with secure tokens and reducing where data exists, organizations can strengthen security, simplify compliance, and reduce breach exposure.
Learn how Bluefin’s tokenization and payment security solutions help organizations protect sensitive data while reducing PCI scope.
How Does Vaultless Tokenization Work FAQs
Is vaultless tokenization more secure?
Implemented well, vaultless tokenization can improve security by reducing where sensitive data is stored and eliminating a central token vault as a high-value target.
Can vaultless tokenization replace encryption?
No. Encryption protects data when it is stored or transmitted, serving a different role from tokenization, which reduces where sensitive data appears in the first place.
What types of data can be tokenized?
Many types of sensitive information can be tokenized, including PANs, PHI, PII, and other data that systems need to use without exposing the original value.
