Tokenization Definition

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Merchant Account Glossary

Merchant Account Tokenization Explained:

What is Tokenization? Tokenization is a data security measure that replaces sensitive card and transaction information with a unique, random number (or “token”) that can be used in place of the real card data. Tokenization allows merchants to store a representation of a card’s information on-site (for tips, recurring billing, etc.) without actually storing the card’s information. The real card information is stored on a secure third-party server that can easily translate a “token” into unencrypted information before sending it to a processing network.

Tokenization removes the burden of data security from merchants, as they are never actually in possession of a cardholder’s information for longer than is necessary to complete the sale. This is compliant with the guidelines established by the Payment Card Industry Data Security Standard, or PCI DSS.

Tokenization Video Explanation

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