Tokenization has grown from something that is managed within the confines of a few experts using specific software to becoming the ultimate key to improving customer satisfaction during paying. At OnionPay, we are incredibly grateful for these innovative solutions. As such, this article will try to explain the concept of tokenization and its underlying benefits. Let us find out.
What exactly do we mean by Tokenization?
Tokenization is a highly secure method of storing data about payment methods like bank card information. In the end, a credit card is introduced to the system, and the system generates a token in exchange. The token serves as a signal to remove the card from the system whenever it is required, but it is not connected to the actual card. Thus, possessing the token doesn’t provide access to the card’s details without having to go through the tokenization process.
In simpler terms, imagine that the tokenization process is like a book. If your card is handed to it, it’s stored on a random page. In return, you receive the page number in order to locate the card. So when you are ready to use that card, you enter the page number, and the book gives you the card. When this procedure is in place, everyone with access to this number can not be able to access the card without consulting the book first.
If we apply this concept to real life and apply it to the real world, we can see the advantages. For example, let’s consider a site that sells specific products and offers recurring delivery. When clients purchase something on the site, they’ll present their credit card, but to make recurring purchases (such as the shipment of particular cosmetics on the 1st day of the month, for instance), the information must be kept by the website to allow a monthly installment to be completed.
Suppose the information on the card is not stored correctly. In that case, unauthorized personnel or even certain kinds of criminals could gain access to it which can cause inconvenience for the customer and a significant problem for the merchant. To solve this issue most efficiently, we suggest tokenization.
When an individual presents their card, the payment platform will collect the details and pass it to the system for tokenization which then returns that token back to the site to take care of the transaction. The website will then store the token, along with the information entered in the registration process.
If the website owner is required to debit the client in the future, it only needs to pay the amount and an authorization token directly to the platform. This platform then sends an authorization to the system for tokenization which, in turn, will get the card’s information and complete the transaction on behalf of the website.
In this way, the site does not have to keep the actual card information to process payments, and the process of payment will be restricted to the exchange with the tokenization platform and its payment system, two components that are distinguished by their superior security levels.
Importance of Tokenization in a post-covid world
Given the effects that the continuing COVID-19 outbreak has affected cyber-security, the safety features of these have become more essential than they ever were. After the outbreak, cybercrime has increased dramatically as both businesses and their customers utilize online solutions for all types of transactions. This means that cards of people are being stored and processed, which means there are a greater number of possibilities for cybercriminals. So, security tools like tokenization are more crucial than ever before because they can ensure that the customer’s private information is secure and help build an impression of confidence and trust between businesses and customers.
It is evident that tokenization offers many advantages, including the safe processing of payment recurring, eliminating the requirement for the customer to enter their card details multiple times, and so on. Due to these benefits, the usage of tokenization is becoming more common. It’s an incredibly popular method that is certain to remain.
Grow your business faster with OnionPay
OnionPay, operated by Zhudao infotech private limited, is one of the most reliable Indian payment aggregators for startups. Being a PCI DSS Level 1 certified digital payment gateway, OnionPay offers a superior checkout experience and numerous payment options. In addition, our solutions have been specifically designed and developed to accept any payment method at any time and on any device, and with bank partners of any kind.