Pros And Cons Of Tokenized Payment Systems

When payments are made online, there are both good things and bad things about. However, there is no doubt that the good is far above the few bad things that take place when online payments are made. Hence there is no doubt that there always is a place and scope for improvement. As technology moves forward in online payment, online cybercriminals and others are also becoming more and more intelligent and smart. They are now finding out new ways and means by which they can secure sensitive information and lay their hands on important data with a view to defraud the customers. Hence, blocking as many leakage and pilferage avenues as possible is one of the best ways forward.

The instances of credit and debit card breaches are increasing. Amongst the many options being thought out, there is no doubt that tokenization if the latest. It also has some exciting features attached to it. We are sharing some advantages and disadvantages with regard to tokenized payment systems, for the benefit of our readers. We are sure it will be useful in more ways than one for those who are looking at ways to reduce breach of information and possible frauds.

Advantages

Data Protection: This is one of the most obvious benefits of tokenization. The latest technology in encryption is used. In the normal circumstances, the customers are required to part with their PAN number or the personal identification number. This is the 16-digit number that comes embossed with all credit and debit cards. When this number stays at the vendor’s point, there is every chance of it being accessed by cybercriminals and being misused. They could use the number to break through the bank details and credit card details of customers and siphon funds off. However, this is ruled out in a tokenized system. This is because the PAN number is not visible to the outside world. What instead is visible is a string of encrypted numbers that make no sense at all.

Transactions Become Anonymous. Anonymity is another big advantage of a tokenized payment system. Starting from the vendor end to the card service providers and then to the vendor’s bank account, each and every movement of data is fully secured and becomes anonymous. It is replaced by a token id as mentioned above. It, therefore, has obviously no meaning and relevance to anybody who accesses the data and even has a look inside it. The actual PAN number, the bank details, the credit card tokenization details, and other such information are stored inside the token and it is almost impossible to decipher it because it is encrypted very solidly.

Pros And Cons Of Tokenized Payment Systems

When payments are made online, there are both good things and bad things about. However, there is no doubt that the good is far above the few bad things that take place when online payments are made. Hence there is no doubt that there always is a place and scope for improvement. As technology moves forward in online payment, online cybercriminals and others are also becoming more and more intelligent and smart. They are now finding out new ways and means by which they can secure sensitive information and lay their hands on important data with a view to defraud the customers. Hence, blocking as many leakage and pilferage avenues as possible is one of the best ways forward. The instances of credit and debit card breaches are increasing. Amongst the many options being thought out, there is no doubt that tokenization if the latest. It also has some exciting features attached to it. We are sharing some advantages and disadvantages with regard to tokenized payment systems, for the benefit of our readers. We are sure it will be useful in more ways than one for those who are looking at ways to reduce breach of information and possible frauds.

Advantages

Data Protection: This is one of the most obvious benefits of tokenization. The latest technology in encryption is used. In the normal circumstances, the customers are required to part with their PAN number or the personal identification number. This is the 16-digit number that comes embossed with all credit and debit cards. When this number stays at the vendor’s point, there is every chance of it being accessed by cybercriminals and being misused. They could use the number to break through the bank details and credit card details of customers and siphon funds off. However, this is ruled out in a tokenized system. This is because the PAN number is not visible to the outside world. What instead is visible is a string of encrypted numbers that make no sense at all.

Transactions Become Anonymous. Anonymity is another big advantage of a tokenized payment system. Starting from the vendor end to the card service providers and then to the vendor’s bank account, each and every movement of data is fully secured and becomes anonymous. It is replaced by a token id as mentioned above. It, therefore, has obviously no meaning and relevance to anybody who accesses the data and even has a look inside it. The actual PAN number, the bank details, the credit card details, and other such information are stored inside the token and it is almost impossible to decipher it because it is encrypted very solidly.

The Downsides

However, it would be very early to suggest that the above payment system is foolproof and completely secure. Though it certainly is an improvement from the other options, there are some grey areas that need to be taken into account.

•    It still is in the developmental stage and there are some rough areas about tokenized payments that need to be ironed out.
•    Cyber thieves may not take too long to find a way by which they can enter into the tokenized numbers and bring out the data and make wrong use of it.

However, it would be very early to suggest that the above payment system is foolproof and completely secure. Though it certainly is an improvement from the other options, there are some grey areas that need to be taken into account.

•    It still is in the developmental stage and there are some rough areas about tokenized payments that need to be ironed out.
•    Cyber thieves may not take too long to find a way by which they can enter into the tokenized numbers and bring out the data and make wrong use of it.

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