For organizations, it can be a daunting task to search for the right security technology, since there are plenty of options in the market that are surrounded by specific industrial definitions and jargon. There is not much dependable information on basis of which a smart business decision can be taken. To lend a shoulder in this process, we are going to discuss two of the most popular technologies that are comparable to each other: Tokenization vs Encryption.
What Is Data Encryption?
Data encryption refers to the process of utilizing an encryption key for changing the data temporarily. The process allows the data to become unreadable to those who do not have the decryption key. This is a general method to secure sensitive information. Nearly thousands of businesses are using encryption to safeguard:
- Cardholder data (CHD)
- Financial account numbers
- Nonpublic personal information (NPI)
- Payment card information (PCI)
- Personal data
- Personally identifiable information (PII)
Tokenization vs Encryption
The major difference between these two is the security method used by each. Tokenization protects the data by using a token, whereas a key is used in encryption. Here, the token is an irreversible, non-sensitive placeholder that replaces the sensitive data, along with storing it in the outer environment. In Encryption, the content of data is encoded on its storage place using a key that is shared amid the source of data encryption and the source that needs to decrypt it.
| Tokenization | Encryption |
| Suitable for structured data like Social Security, financial transactions, credit card numbers, and online purchases. | Suitable for unstructured fields or databases of data stored in several systems or the data that are less frequently exchanged. |
| It is non-reversible. | It is reversible and can be broken. It depends on algorithms. A weak algorithm means weak security. |
| It is data protection since it is token-based security. | All encryption is breakable and so it is data obfuscation rather than data protection. |
Tokenization vs Encryption: Compliance Concerns
In the discussion of Tokenization Vs Encryption, it is important to know that the latter is reversible that has prompted governing entities like PCI Security Standards Council still consider encrypted data as a sensitive one. Hence, it requires additional safeguard measures for complying with PCI DSS requirements. What it means for businesses is that they will have to shed out extra expenses. Adding on, in case of weak encryption results in a data breach – then the subsequent fines will put your company in quicksand.
What Is Good for Your Business?
Tokenization is free from all these issues since it does not depend on encryption to protect data. It replaces the sensitive information with data (randomly created) that is mapped one-to-one within your existing environment. A token is just a placeholder so it does not possess any inherent value. Actual data is stored completely someplace else. This virtually eliminates the chances of data theft.
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