What is Data Tokenization?

By Boris Dzhingarov

Data tokenization involves replacing sensitive data such as Social Security Numbers or credit card numbers with nonsensitive tokens in order to protect consumer privacy. Merchants and payment processors use this practice frequently in order to maintain consumer security.

Data tokenization can help businesses meet regulatory compliance while keeping operations running efficiently, while protecting sensitive data from being exposed by insiders. It is often employed in combination with encryption to safeguard sensitive information from unwanted access by employees or third-parties.


Data tokenization allows businesses to protect sensitive data without compromising its security by replacing sensitive information with surrogate values, like tokens. By doing this, they are able to retain full value of original data without risking its integrity or its security.

Tokenization provides another layer of security against cybercrime by making it harder for cybercriminals to gain access to an organization’s original data even if they break into its IT environment, because tokenized data is stored outside your environment and separate.

However, tokenization still poses security concerns. Tokens should be generated using an algorithm or process that cannot be compromised through direct attack, cryptanalysis, side channel analysis, token mapping table exposure or brute force techniques.

Tokenization processes should also offer assurances that each value will generate different tokens, similar to how stronger encryption schemes ensure different ciphertexts will be generated when encrypting data. This helps prevent an attacker from gathering any intelligence on whether two plaintexts are identical.


Data tokenization offers businesses an effective solution that strikes an effective balance between data access and security. This tool helps keep sensitive and regulated information out of data lakes and warehouses while simultaneously supporting efficient business operations and analytics workflows.

Furthermore, this solution ensures that only authorized users can access original data – making it an excellent way to ensure compliance and reduce risks from external service providers or software vendors who require access to sensitive information.

Tokenization is a scalable and standardized way of safeguarding sensitive data. This service can be implemented within an isolated segment of an in-house data center or as a service provided by a secure data provider.


Data is one of the most essential assets any business possesses, so it is critical that it is safeguarded from security breaches or leaks so as to maintain competitive edge and stay ahead of their rivals.

Tokenization allows businesses to protect sensitive customer information by replacing it with randomly generated tokens that only authorized organizations can access, ultimately increasing trust between businesses and their customers.

Tokenization is a widely adopted strategy for meeting regulatory requirements regarding Personally Identifiable Information (PII). By substituting sensitive customer information with random values that cannot be reversed or cracked by hackers, tokenization makes online transactions infinitely more secure.


Data tokenization is an efficient, secure solution for storing sensitive information that protects it from breaches and compliance violations, while still allowing businesses to utilize their existing storage systems for analysis and other business functions while upholding the integrity of original documents.

Tokenization involves replacing sensitive data with nonsensitive tokens that can be accessed by applications, people and processes while remaining hidden from unauthorized users and potential security risks.

Tokenization systems may be managed either on-premise in a secure segment of a data center, or as a service from a trusted service provider. Vaultless tokenization employs an HSM for cryptographically tokenizing and de-tokenizing sensitive data without relying on an additional vault or database for token storage.

Tokenization of sensitive data helps minimize the financial consequences of data breaches, including PCI DSS penalties and fines, while simultaneously building customer trust, complying with data privacy regulations, and supporting online payments.