EMV Tokenization definition
EMV tokenization is a security technology that protects cardholder information.
Break down of the terms:
- EMV: This stands for Europay, MasterCard, and Visa. The three companies that developed the standard.
- EMV technology: A more secure method for authenticating transactions than magnetic stripe cards.
- Tokenization: Replacing sensitive data with a unique series of numbers called a token. This token can then be used in transactions without exposing sensitive data. If a hacker intercepts the token, it is useless without the original data.
How EMV and tokenization work together:
- A chip card (EMV) is used at a point-of-sale terminal. The transaction information converts into a unique code specific to that transaction. This protects sensitive information and against fraudsters creating counterfeit cards.
- When the card information is stored or processed tokenization replaces the PAN with a token. It renders the data useless to hackers if they manage to access it.
Where EMV Tokenization is used:
- Mobile Payments: Platforms like Apple Pay, Google Pay, and Samsung Pay use EMV tokenization. When you add a credit or debit card to these platforms, the card number is replaced with a device-specific token.
- E-Commerce: When customers save their card details for faster checkout, the system keeps a token instead of the actual card details.
- Card-on-File: Subscription-based platforms, utilities, and monthly memberships, store card details. Many of these businesses store tokens that represent the card details.
- Point-of-Sale (POS) Systems: Modern POS systems use tokenization to secure in-store card transactions. When a customer uses their card at these terminals, the transaction is processed using a token.
- Wearable Devices: Wearable tech that offers payments use tokenization. A token represents a card added to a wearable device.
- Integrated Payment Solutions: Many businesses have integrated payment solutions. Their CRM, inventory management, and payment processing are linked. Tokenization ensures that cardholder data flowing through these integrated systems remains secure.
- ATMs: Some modern ATMs that accept cardless transactions use tokenization.