Comparison Between Tokenization vs. Encryption

Tokenization and encryption are two of the most popular methods for protecting business data.

Fremont, CA: Tokenization and encryption are two of the most popular methods for protecting business data. However, choosing the best choice for your company needs you to consider factors such as company size, security goals, cost, and your comfort zone with each choice. Your final goal should be finding the best option to protect your company’s data and reputation—especially when valuable data and information are being shared and exposed online more frequently.

What is tokenization?

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Tokenization is substituting a token (or data with no significant value) for actual information. Tokens are randomly pulled from a token vault database to replace the real data.

An example of this process sometimes happens when an online business accepts payment from a customer.

Suppose the transaction takes place through a third-party site like PayPal or Shopify. If so, the third-party site may disguise the credit card number with other characters (tokens) to protect the customer’s information. As a result, the business can only notice the tokenized information and does not have access to the real card number.

Advantages Of Tokenization

Tokenization means that your data isn’t inevitably compromised if a breach arises. However, Statista reported 540 data breaches in the first half of 2020, so it’s clear that these threats are nothing to take lightly. Thankfully, organizations implementing tokenization have a failsafe: Hackers can only see the useless tokens instead of gaining access to sensitive data.

Similarly, tokenization decreases the in-house responsibility of managing sensitive data.

When you and your company decide to gather consumer data, you’re responsible for ensuring its protection. Tokenization software enables you to store data in a third-party database. Consequently, your organization isn’t required to maintain the staff and resources to manage sensitive data.

Though tokenization doesn’t eradicate PCI-DSS and other compliance requirements, storing tokens instead of vulnerable data can decrease your team’s efforts to remain compliant. In addition, tokenization will likely simplify the software tools and tasks needed to prove compliance, saving you valuable time and money.

Disadvantages Of Tokenization

Similar to most security measures, the tokenization process adds complexity to your IT infrastructure. For instance, the steps your business’s ecommerce platform takes to facilitate a transaction turn a bit more complicated thanks to tokenization. In addition, the customer’s billing information must go through detokenization and retokenization systems so it stays protected while being authorized.

Before accepting transactions, you may find that your preferred payment processor does not support tokenization. Unfortunately, tokenization is still only supported by a limited number of payment processors. Then you may have to go with a payment processing tool that may not be your first choice.

Also, tokenization doesn’t eradicate all security risks, especially where third-party token vaults are involved. While storing data offsite simplifies several aspects of data security, you must ensure the vendor you choose has appropriate systems to protect your data.

Tokenization Software Vendors

Tokenization is still an emerging data security tool, but there are many products accessible that support it.

- TokenEx provides traditional vault tokenization that integrates with all payment processor tools. It offers significant flexibility and empowers you to create, validate, or erase tokens as you see fit. It also enables you to tokenize data in different database and architecture types, comprising ERPs, CRMs, and ESBs.

- Thales Ciphertrust also provides vaulted tokenization, with the option to go vaultless. This arrives in the form of dynamic data masking, where administrators can create policies to mask part of a field by following who is using and visualizing the data.

- Otherwise, data and payment security companies Bluefin and Imperva primarily provide vaultless tokenization options that use tokenization algorithms blended with encryption tactics. They seek to eradicate the need for token vaults, effectively reducing latency issues that conventional vaulted tokenization creates.

What is encryption?

Encryption is a system that utilizes mathematical algorithms to turn sensitive data into non-readable information called ciphertext. Then, an algorithm and encryption key is required to make the text readable again.

Following the tokenization instance, let’s say the same company assembles the mailing addresses of its customers. With encryption, the company can use ciphertext to protect the information, so it’s only accessible by using an encryption key. Whether the company uses file-based encryption (FBE) or full disk encryption (FDE), the encryption key can be the same for the complete database of addresses or unique to each address.

Advantages Of Encryption

Encryption can be utilized to protect a variety of data types. Along with things like credit card information or social security numbers, encryption can protect unstructured data like files or emails (unlike tokenization). It’s well fitted to safeguard entire documents, whereas tokenization is mostly for smaller pieces of data like account numbers. If you tried to tokenize large pieces of information, it would likely create latency issues and prove ineffective.

Encryption allows you to share decryption keys with others or access files remotely without creating security vulnerabilities. With tokenization, you would require to find a way to securely share the original information so they can decipher the token. With encryption, still, all that is required is the key.

Encryption processes are generally quicker than tokenization, too. Tokenization takes much longer as each character or number is modified to a random character. Encryption utilizes algorithms to secure data, which takes less time than the entirety of the tokenization process, despite the size of your database.

Disadvantages Of Encryption

First, all hackers required to access protected information is the decryption key. Distinct from tokenization, where a set of random tokens protects the values, data is encrypted through a single key. If hackers obtain access to that key, everything it encrypts is vulnerable. This could incorporate the whole database or only a single file, depending on whether the encryption is file-based or full disk. Regardless, the security risks posed by a compromised encryption key sometimes outweigh the advantages.

Encryption can also impede software functionality. The ciphertext employed in encryption may not be consistent with other software tools, so the functionality and value of those applications may be impeded. Based on the encryption software you choose, you may be limited to a select number of vendors for your other software requirements.

Additionally, many recent newsworthy information breaches involved systems protected by database encryption but lacked additional security measures like multi-factor authentication. These additional layers of security are necessary to ensure your encryption keys are protected, but they also mean the time and resources required to stretch that much further.

Which technique is right for your organization?

In case of selecting the best data security technique for your organization, the options that you have to weigh are things like:

- Security risks: The type of industry are you in? Is your company prone to attacks?

- Data protection needs: Are you trying to defend numbers like credit cards and account numbers (tokenization) or complete databases (encryption)?

- Cost: How much has your IT team budgeted for tokenization and encryption programs?

- Compliance: Will one option make it simpler for your organization to comply with data security policies over the other?

- Company size: How does tokenization or encryption advantage your company according to its size and customer base?

You may determine that you don’t have the means to store sensitive data, so tokenization makes the most sense. Or, possibly, encryption is the way to go as it’s easier to share decryption keys. The best choice is to protect valuable information and expose your company’s security vulnerabilities.