Today’s payment technology advances have enabled the seamless and convenient experiences that consumers now expect from businesses. As a result, e-commerce continues to expand steadily across both global and U.S. markets. Global e-commerce sales reached approximately $6.4 trillion in 2025 and are projected to approach $6.9 trillion in 2026, reflecting continued year-over-year growth. In the United States, e-commerce sales surpassed $1.2 trillion, accounting for more than 16% of total retail sales.
With that growth comes opportunity for hackers. Between 2023 and 2027, global online payment fraud losses are expected to exceed $343 billion.
In IBM’s 2025 Cost of a Data Breach Report, customer personally identifiable information (PII) – including names, Social Security numbers, and financial data – remains one of the most frequently compromised and highest-value data types, involved in more than half of all breaches (approximately 53%), with the cost of exposed PII averaging around $160 per record globally.
What Is PII Data Encryption?
PII data encryption is the process of transforming personally identifiable information from readable plaintext into unreadable ciphertext so that unauthorized users cannot understand it without the proper cryptographic key. NIST defines encryption as a cryptographic transformation that conceals a data set’s original meaning, and decryption as the process that restores it to readable form.
Organizations typically encrypt PII in two places: data at rest and data in transit. Data at rest includes information stored in databases, cloud environments, backup systems and internal applications. Data in transit refers to information moving between systems, devices, browsers or networks. Protecting both states is important because PII can be exposed whether it is being stored or transmitted.
PII encryption matters because it helps make sensitive data unusable to unauthorized parties. If encrypted information is accessed without the corresponding key or confidential process needed for decryption, the data remains unreadable. This is why encryption is widely used as a foundational safeguard for protecting sensitive information and supporting broader security and privacy obligations.
What PII Data Should Be Encrypted?
Not all personally identifiable information carries the same level of risk, but organizations should take a structured approach to identifying which data requires encryption based on sensitivity, regulatory requirements and business use.
Direct Identifiers
Direct identifiers are data elements that can immediately identify an individual on their own. These are the highest-risk data types and should always be encrypted when stored or transmitted.
Examples include:
- Social Security numbers (SSNs)
- Credit and debit card numbers (PAN)
- Full names when combined with other identifying data
- Driver’s license or passport numbers
- Bank account and routing numbers
Because these data points can directly enable identity theft or financial fraud, they require the strongest levels of protection, including encryption and, where possible, tokenization.
Indirect Identifiers
Indirect identifiers do not identify an individual on their own but can be combined with other data to do so. While often overlooked, these data types can still present significant risk when aggregated.
Examples include:
- IP addresses
- Login credentials or usernames
- Device identifiers
- Behavioral or transactional data
- Geolocation data
These data elements should be evaluated within the broader data environment to determine appropriate protection levels, particularly when they are linked to direct identifiers.
Not All Data Requires the Same Level of Encryption
Organizations should prioritize encryption based on data sensitivity and usage. Highly sensitive data, such as financial and identity information, requires strong encryption at rest and in transit. Lower-risk data may require different levels of protection depending on how it is stored, accessed or combined with other datasets.
Taking a risk-based approach to PII encryption helps organizations apply the right controls without overcomplicating systems, while still maintaining strong protection for the data that matters most.
How PII Data Encryption Works
PII data encryption converts readable information (plaintext) into an unreadable format (ciphertext) using cryptographic algorithms. This process ensures that even if data is accessed without authorization, it cannot be understood without the appropriate key to decrypt it.
At a basic level, encryption follows a simple process:
- Plaintext (readable data) is input into an encryption algorithm
- The algorithm uses a cryptographic key to transform the data
- The output is ciphertext, which appears as random, unreadable data
To return the data to its original form, the correct decryption key must be applied. Without access to that key, the encrypted data remains unusable.
The Role of Encryption Keys
Encryption keys are central to the security of encrypted PII. These keys act as the mechanism that locks and unlocks data. If encryption keys are exposed, stolen or improperly managed, the protection encryption provides can be significantly weakened.
For this reason, organizations must implement strong key management practices, including:
- Secure key storage and access controls
- Key rotation and lifecycle management
- Separation of duties for key access and usage
Effective key management is often the difference between encryption that simply exists and encryption that actually protects data.
Common Encryption Standards
Organizations typically rely on well-established encryption standards to protect PII:
- AES-256 (Advanced Encryption Standard): A widely used symmetric encryption standard known for its strength and efficiency, commonly used to protect data at rest
- TLS (Transport Layer Security): A protocol used to encrypt data in transit between systems, such as web browsers and servers
Together, these technologies help ensure that PII remains protected both while it is stored and while it is being transmitted across networks.
Encryption vs Tokenization for PII Protection
When securing personally identifiable information, encryption and tokenization are often discussed together. While both are critical data protection techniques, they serve different purposes and are most effective when used in combination.
Encryption Protects Data
Encryption transforms PII into unreadable ciphertext using a cryptographic key. This ensures that if data is accessed without authorization, it cannot be understood without the proper key to decrypt it.
Encryption is commonly used to protect data:
- In transit between systems (e.g., TLS)
- At rest in databases and storage environments
- During processing in secure systems
However, encrypted data still exists within the environment. If encryption keys are compromised or mismanaged, the underlying data may still be exposed.
Tokenization Removes Sensitive Data
Tokenization replaces sensitive PII with a non-sensitive equivalent, or token, that has no intrinsic value outside of the tokenization system. The original data is stored securely in a separate environment, often referred to as a token vault.
This allows internal systems to operate using tokens instead of actual PII, significantly reducing where sensitive data exists within the organization.
Common use cases for tokenization include:
- Stored customer profiles
- Recurring payments or billing
- Omnichannel customer interactions
When to Use Each Approach
Encryption is best suited for scenarios where sensitive data must be read or processed in its original form, such as secure data transmission or protected storage.
Tokenization is ideal when organizations need to reference or use data without storing the original value, reducing the overall exposure of PII across systems.
Why Using Both Is Stronger
Encryption and tokenization are not competing approaches, they are complementary. Encryption protects sensitive data where it must exist, while tokenization reduces how widely that data is stored and accessed.
When combined with technologies like point-to-point encryption (P2PE), organizations can encrypt data at the point of capture and replace it with tokens within internal systems. This layered approach minimizes risk, reduces data exposure and strengthens overall data protection strategies.
PII Encryption Requirements and Regulations
Organizations that collect, process or store personally identifiable information must comply with a growing set of global and industry-specific regulations. While requirements vary, encryption is consistently recommended, and in many cases expected, as a foundational safeguard for protecting sensitive data.
GDPR (General Data Protection Regulation)
The GDPR governs the protection of personal data for individuals in the European Union. While it does not mandate encryption in all cases, it strongly recommends it as an appropriate technical measure to protect personal data and reduce risk in the event of a breach. Organizations that fail to adequately protect data can face significant financial penalties and reputational damage.
CCPA (California Consumer Privacy Act)
The CCPA provides California residents with rights over their personal information and requires businesses to implement reasonable security measures. Encryption plays an important role in demonstrating that organizations are taking appropriate steps to safeguard consumer data, particularly in the context of breach liability.
HIPAA (Health Insurance Portability and Accountability Act)
HIPAA regulates the protection of sensitive health information (PHI). While encryption is considered an “addressable” requirement rather than strictly mandatory, it is widely adopted as a best practice to secure data both at rest and in transit, especially given the sensitivity of healthcare information.
PCI DSS (Payment Card Industry Data Security Standard)
PCI DSS governs the protection of cardholder data, which often overlaps with PII. It requires strong encryption for data transmitted across open networks and emphasizes protecting stored data through encryption, tokenization or truncation. PCI DSS also promotes technologies like point-to-point encryption (P2PE) to reduce data exposure and strengthen security.
Why Encryption Is Critical for Compliance
Across these frameworks, encryption is consistently positioned as a key control for protecting sensitive data. It helps organizations reduce the risk of unauthorized access, limit the impact of data breaches and demonstrate a commitment to responsible data handling practices.
Failure to implement appropriate safeguards—including encryption—can result in regulatory penalties, legal liability and loss of customer trust. As data privacy regulations continue to evolve, organizations must ensure that encryption is not just implemented, but properly managed and aligned with broader security strategies.
Common Threats and Best Practices to Securing Personal PII
Organizations that handle PII bear a profound responsibility. Having an infrastructure in place is crucial to protect PII that is collected and stored as well as how it is being used to ensure the confidentiality, integrity, and availability of this information. Failure to adequately protect PII not only exposes individuals to the risks of identity theft and fraud, but also poses substantial threats to an organization’s reputation.
There are several common threats that organizations and individuals face when it comes to safeguarding personal information. Data breaches, phishing attacks, third-party risks, malware and ransomware are some of the most common external threats organizations face. Inside the walls of an organization, outdated software and systems, weak authentication and access controls, and lack of data encryption increase the likelihood of sensitive data falling into the wrong hands.
Implementing best practices for PII security and privacy protection is essential for organizations to mitigate the risks of data breaches, identity theft, and other malicious activities. Some best practices include:
- Access Controls: Enforce strict controls for PII and implement multi-factor authentication
- Employee Training: Foster a culture that empowers employees to recognize and report potential security threats
- Data Minimization: Collect only necessary information, purging unnecessary PII through secure procedures
- Transparency: Clear communication to users on how PII is collected, processed, and stored
- Third-Party Risk Management: Vet and monitor the security practices of third-party vendors
- Regular Security Assessments: Conduct regular assessments to identify vulnerabilities in the infrastructure
- Incident Response Plan: Develop a comprehensive incident response plan to promptly address potential breaches
PII Encryption Best Practices
While broader security controls are essential, encryption-specific practices play a critical role in protecting sensitive data once it is collected and stored.
Organizations should ensure that PII is encrypted both at rest and in transit. Encrypting data at rest protects information stored in databases, backups and internal systems, while encrypting data in transit ensures that sensitive information remains secure as it moves between devices, applications and networks.
Using strong encryption standards, such as AES-256, is essential for maintaining a high level of protection. These standards are widely accepted and designed to withstand modern attack methods when properly implemented.
Equally important is the implementation of robust key management controls. Encryption keys must be securely stored, regularly rotated and accessible only to authorized personnel. Without proper key management, even strong encryption can be compromised.
However, encryption alone does not reduce where sensitive data exists within an environment. Organizations should consider combining encryption with tokenization and point-to-point encryption (P2PE). Encryption protects data, while tokenization replaces sensitive values within internal systems, and P2PE ensures data is encrypted immediately at the point of interaction. Together, these approaches help minimize exposure and strengthen overall data protection.
Finally, regular security audits and continuous monitoring are necessary to ensure encryption controls remain effective. Ongoing assessments help identify vulnerabilities, validate compliance and ensure that data protection strategies evolve alongside emerging threats.
How to Secure PII Data Across Your Environment
Protecting PII requires more than encrypting data after it has already entered internal systems. A stronger approach focuses on securing data at the point of interaction and minimizing where sensitive information exists across the environment.
Bluefin’s data security platform combines PCI-validated point-to-point encryption (P2PE) and tokenization to help organizations protect PII, reduce data exposure and support compliance requirements across payment and data environments.
Encrypt PII at the Point of Interaction
Traditional security models focus on protecting data once it is stored within systems. However, if sensitive data enters internal environments in an unprotected state, it increases the risk of exposure during a breach.
Bluefin’s PCI-validated point-to-point encryption (P2PE) encrypts sensitive data immediately at the point of capture, such as a payment device or input field. This ensures that PII is never exposed in plaintext within internal networks and remains protected throughout its lifecycle.
By encrypting data before it enters organizational systems, businesses can significantly reduce the risk associated with data interception, malware and ransomware attacks.
Replace Stored PII With Tokenization
While encryption protects data, it does not reduce where that data exists. Many organizations still store large volumes of sensitive PII within internal systems, increasing both risk and compliance burden.
Bluefin’s ShieldConex® platform replaces sensitive data with secure, non-sensitive tokens that can be safely used across applications, databases and workflows. This allows organizations to eliminate the need to store raw PII while maintaining functionality for payments, analytics and customer experiences.
By reducing the presence of sensitive data across systems, tokenization helps minimize the impact of potential breaches and simplifies compliance efforts.
Reduce PCI and Privacy Risk Exposure
Sensitive data remains a primary target for attackers. In fact, PII continues to be one of the most commonly compromised data types in breaches, driving both financial loss and reputational damage.
A layered approach that combines P2PE and tokenization helps organizations:
- Prevent raw PII from entering internal systems
- Reduce the amount of sensitive data stored across environments
- Limit the impact and “blast radius” of a potential breach
- Support compliance with PCI DSS, GDPR, CCPA and other regulations
As ransomware and data breach threats continue to evolve, securing PII requires a strategy that focuses not just on protecting data, but on reducing its exposure altogether.
Secure PII Data Encryption with Bluefin
These practices represent traditional “defend the fort” strategies that can help organizations strengthen their overall security posture. But what protects PII once a threat actor gains access to internal systems? According to IBM’s 2025 Cost of a Data Breach Report, customer personally identifiable information (PII) remains the most commonly compromised data type, involved in more than half of all breaches globally (approximately 53%).
Security experts believe that data encryption is vital for organizations to implement, protecting PII in both transit and at rest. When data is encrypted, even if an unauthorized person or entity gains access to it, they will not be able to read it. Data encryption also helps organizations to meet compliance requirements with privacy regulations set by Europe’s General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA) – ultimately demonstrating their commitment to ethical practices while preserving consumer trust.
PII Data Encryption FAQs
Does PII data need to be encrypted?
While not all regulations explicitly mandate encryption in every scenario, it is widely recommended and often expected as a foundational security control. Encryption helps protect PII both in transit and at rest, and is commonly required to meet compliance standards such as GDPR, HIPAA and PCI DSS. Without encryption, organizations significantly increase their risk of data exposure, regulatory penalties and reputational damage.
Is encryption enough to protect PII?
Encryption is a critical safeguard, but it is not sufficient on its own. Encrypted data can still be exposed if encryption keys are compromised or if sensitive data is widely distributed across systems. A stronger approach combines encryption with tokenization and point-to-point encryption (P2PE) to both protect data and reduce where it exists.
What is the difference between PII encryption and tokenization?
Encryption transforms PII into unreadable ciphertext that can be reversed with a key. Tokenization replaces sensitive data with a non-sensitive token that has no exploitable value outside of the tokenization system. While encryption protects data, tokenization helps reduce the amount of sensitive data stored across systems.
What types of PII should be encrypted?
Highly sensitive data such as Social Security numbers, payment card data, financial account information and healthcare records should always be encrypted. Indirect identifiers, such as IP addresses or behavioral data, should also be evaluated and protected based on how they are used and combined with other data.
When should PII be encrypted?
PII should be encrypted both when it is stored (data at rest) and when it is transmitted between systems (data in transit). For stronger protection, organizations should also consider encrypting data at the point of interaction and limiting where sensitive data enters internal systems.
