Tokenization may sound complicated, but it’s actually very simple
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What Happens During A Tokenized Sale?
When it comes time to process a payment, whether that is through an eCommerce site, an app, or a mobile wallet, the payment processing steps are generally similar. Here is a simplified process for your information.
- The customer initiates payment for our service via our website
- We send a token request to our bank
- Our bank routes our request to Visa/ Mastercard
- Visa/ Mastercard sends a token to your bank
- Your bank returns an authorized token for our use
- Viola! Your sale is complete.
This all happens without our site ever having been given access to your actual card information. That means that even though you might have entered it in on our website we never see or store your actual card number at any point. Tokens can usually be accessed for a short period of time in case a customer needs to have something added on to their order or receive a refund.
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Similarities and differences between tokenization and encryption
Tokenization and encryption are similar in that the data is hidden from would-be interceptors, but the processes are completely different. In tokenization, the customer data gets replaced with a token without exposing the real payment card information to Instagopher. With encryption, the payment card information runs through an algorithm, a mathematical process, to transform the original data into something indecipherable until unlocked with a ‘key’ during processing. Since the process is not randomized like tokenization, the algorithm is somewhat vulnerable to hackers trying to crack the code. In short, encryption is mathematically reversible, and tokenization is not. Additionally, encryption is not a complete, end-to-end security method, like tokenization.