Credit card and debit card thefts and misuse are increasing quite rapidly and therefore there is a need to find a way out of this. Amongst the many options available, there are reasons to believe that tokenization could be a way forward. We will try and something more about card tokenization and how it could play a big role in reducing the number of credit card frauds and misappropriation of online funds of thousands of customers. However, before understanding the advantages of tokenization of credit card payment and collections, we need to find out as to what exactly token payment are all about. We need to have some rough idea as to how tokenization works in a real-life environment.
It Does Not Store PAN or Personal Account Number
Whenever a customer swipes his or her debit or credit card at any checkout center, in the normal circumstances the sixteen digit PAN or Personal Account Number gets stored in the payment system of the merchant. This could often lead to pilferage and fraudulent transactions and withdrawal of money could happen. However, this is not possible in a tokenized payment system. This is because the PAN number is replaced by a randomly generated token IDs. Therefore the vital information pertaining to the customer and his or her debit or credit card always remains with the customers.
How Does The Payment Go Through
Once the payment is made for transactions by the customers using credit or debit cards, a confirmation is sent by the payment processor back to the merchant. This is done with the help of a randomly generated token ID and this replaces the PAN number and the data pertaining to it at all points of time. There is no situation or event where the customers’ credit card or debit card data is stored. Hence, it becomes almost impossible for cybercriminals to lay their hand on sensitive information about the customers’ financial details, credit card details, and bank account details and so on. Therefore the level of security increases quite a bit and the customer gets full protection from hackers and anonymous thieves and other miscreants.
Apart from the above, we are sharing a few more advantages of using this form of tokenized payment system for credit and debit card transactions:
Internal protection is one big advantage of this form of payment. It also prevents those who are connected with your organization or banks including vendors and employs from having any access to sensitive financial information. It has to be borne in mind that the token IDs are not only generated randomly but they are also not readable by others except the payment processor machines.
PCI scope also gets reduced quite a bit. When you choose omni channel card payment, you also become PCI compliant. This is because retailers will not be storing any data. This would help them to do away with the need to invest in resources for protecting customer information that is sensitive in nature.
Online protection also gets increased quite a bit. We have something known as EMV chip which also is now being used in credit cards. This offers extra security for retail shoppers. Unless the chip is present payments will not go through. It will move forward only when the customers supply a signature or PIN or Personal Identification Number.