In today’s digital world, organizations handle vast amounts of sensitive information, from payment details to personal data. As data security threats continue to rise, businesses must adopt stronger methods to protect the information they collect and store. Tokenization has emerged as a powerful solution, offering a way to secure sensitive data, reduce risk, and support compliance efforts across industries.
Tokenization is the process of removing sensitive information from your internal system — where it’s vulnerable to hackers — and replacing it with a one-of-a-kind token that is unreadable, even if hackers manage to breach your systems. The token is usually a random sequence of numbers or letters that the organization’s internal systems can use at little risk while the original data is held securely in a token vault.
Historically, tokenization has been deployed to protect credit card and debit card data in storage. Storing this data is essential for recurring and subscription transactions so that the customer can be billed on a regular basis without having to re-enter their information. Storing clear-text credit and debit card data in any form violates PCI compliance rules, as well as data privacy rules.
In recent years, data tokenization has been expanded to now also “mask” Personally Identifiable Information (PII), Protected Health Information (PHI) and banking information, especially pertaining to ACH account details. Examples of the type of data a tokenization system can secure include:
Additionally, tokenization is no longer exclusively used for the protection of data in storage. It can also be used to immediately tokenize data upon entry into a web form or e-commerce page.
Digital tokenization has been around for over 20 years and was primarily designed to secure credit and debit cards. In the early days of digital payments, merchants and payment processors would store Primary Account Numbers (PANs) – the 16-digit debit/credit card number – alongside other transaction information. Because this sensitive payment information was stored in clear text, it was visible to anyone with system access and was especially vulnerable to data breaches and theft. Inspired by physical token systems like casino chips and vouchers, digital tokens were created to substitute sensitive data in storage.
Tokenization operates through a straightforward but powerful process designed to protect data throughout its lifecycle. First, sensitive information — such as payment card details, banking information, or personal identifiers — is captured through a secure channel, such as a web form, payment terminal, or mobile application.
Once captured, the data is passed to a tokenization system, which replaces it with a unique, random token that carries no meaningful relationship to the original value. This token can then be safely stored, transmitted, or used within internal systems, ensuring that sensitive data is not exposed during normal business operations.
When necessary, authorized systems can perform detokenization, which is the controlled process of converting a token back to its original value. This can work several number of different ways depending on the tokenization solution provider that you use and if you are using a vaultless or vaulted solution. With Bluefin’s ShieldConex, you can detokenize data by making an authenticated API call that includes the token(s) and unique ID provided in tokenization response messages.
Vaultless and vaulted tokenization are two distinct approaches to replacing sensitive data with secure tokens, each with its own structure and security model.
Relies on secure, industry-approved algorithms to transform sensitive data into tokens without maintaining a central token mapping table. This approach eliminates the need to store original data, significantly reducing risk. Since only a few tightly controlled systems can perform detokenization, the majority of systems never see or handle the sensitive data, making vaultless tokenization a scalable and efficient option for organizations. Even if attackers gain access to the tokens, without the secret key, they cannot recover the original data.
Vaulted tokenization typically involves creating a token mapping table, where sensitive data is centralized on that table. This reduces the number of systems processing and/or storing sensitive data, thereby reducing the risk of the overall environment by centralizing that risk in the systems storing and managing the mapping table. Since the mapping table becomes the most desirable target, sensitive data stored in the token mapping table should be encrypted and the secret key managed securely.
Companies that employ tokenization can unlock many different benefits:
For a deeper look at why tokenization has become such a critical security tool, explore our article: What Is Tokenization and Why Is It Important?
Any organization that accepts credit or debit card payments is required to keep that data as safe and secure as possible. The Payment Card Industry (PCI) Data Security Standard (PCI DSS) is the set of regulations established by credit card companies to help protect payment information and isare mandated by the credit card companies to ensure the security of credit card transactions.
Tokenization addresses PCI DSS requirement set #3: protecting cardholder data (CHD) at rest. PCI DSS seeks to reduce retention of sensitive data and safely govern its storage and deletion. Tokenization satisfies this critical requirement by eliminating stored CHD from as many systems as possible. Credit card tokenization not only replaces sensitive data, but it also minimizes the amount of data an organization needs to keep on file, which ultimately helps to reduce the cost of compliance with industry standards and government regulations.
Additionally, the responsibility to protect stored CHD and maintain the proper level of PCI DSS certification then falls on the token (solution) provider, so it ultimately reduces the cost of PCI compliance. This makes an especially big difference for organizations that want to support card-on-file or recurring payments.
While data privacy regulations do not mandate the type of technology adopted to secure data, they both discuss pseudonymization and encryption as relevant data security measures.
One reason for tokens’ increasing use for sensitive, personal information is that they are versatile – they can be engineered to preserve the length and format of the data that was tokenized. Tokens can also be generated to preserve specific parts of the original data values; by adapting to the formats of conventional databases and applications, tokens can eliminate the need to change the database scheme or business processes. Organizations can treat tokens as if they were the actual data strings.
To learn more, read our article Understanding PHI, PII, Data Privacy & Tokenization.
Encryption, simply put, is taking a known piece of data and locking it up so that the data can only be retrieved with a key. In more technical terms, encryption uses an algorithm and a key to take the data and make it unreadable. Of course, this key must be controlled, typically called key management, to keep the data safe. If your data is “123,” and you encrypt the data with key “ABC,” resulting in “98zy65x,” and protect the key properly, all an attacker will be able to see is 98zy65x, which is useless to them.
Tokenization is taking a known piece of data and replacing it with a new random value. For example, the value “123” could be replaced with an unrelated value, such as “978.”
Organizations typically use encryption when they need to secure data that must remain accessible or reversible, such as files, messages, or data in transit. Tokenization, on the other hand, is often chosen for protecting structured data like payment details or personal identifiers that can be removed from internal systems entirely, reducing exposure and compliance scope.
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If you’re exploring tokenization to strengthen your data security, the next step is choosing a solution that fits your needs. Bluefin’s ShieldConex® offers flexible, vaultless tokenization to protect sensitive data across channels, reduce risk, and simplify compliance, — helping you secure what matters most.
Contact us today to see how ShieldConex® can support your data security goals.
Tokenization is used across a wide range of industries that handle sensitive data, including payments, healthcare, banking, insurance, and retail. Organizations that process credit card transactions, store PII, manage PHI, or handle bank account details often rely on tokenization to reduce data breach risk, simplify compliance, and safeguard customer trust. From large enterprises to small businesses, any organization that wants to minimize the exposure of sensitive data can benefit from tokenization.
Choosing the right tokenization solution depends on your organization’s specific needs. Key factors to consider include the types of data you need to protect (such as payment data, PII, or PHI), whether you need vaulted or vaultless architecture, the solution’s scalability, ease of integration with your existing systems, and its ability to support regulatory compliance like PCI DSS or the General Data Protection Regulation (GDPR). It’s also important to evaluate the vendor’s security expertise, support services, and track record in your industry.
Tokenization is the process of devaluing sensitive data by substituting sensitive data elements with randomly generated symbols that represent the original sensitive data. In format-preserving tokenization (FPT), the randomly generated symbols use the same alphabet as the original data. Bluefin leverages FPT to allow your tokenized data to exist within your legacy systems without requiring any refactoring.
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