Tokenization and Encryption: What’s the difference?


Tokenization and Encryption are two different cryptographic methods used for data security. Both of them can be used to protect sensitive cloud data such has cardholder information, financial account numbers and personal data. There are also industry and government regulations that require organisations that handle user data to keep that data either encrypted, or with a service provider who provides a tokenization option.


What is encryption?


Encryption is the process of turning plain text into cipher text. Using a shared key between the sender and receiver of the sensitive data, the text can be decrypted from the cipher text. Any individual that has access to the key can use it to decrypt the data.  Encryption is not bulletproof; the strength of the encryption is based on the key or algorithm used to secure the data. It is good for unstructured data that is not exchanged frequently.


Benefits of encryption:

  • Privacy; ensuring only the intended sender and receiver can access the data
  • Authentication; both sender and receiver parties need the shared key to access the data
  • Security; helps prevent data breaches when the data is in transit or not in use
  • Can be used across various devices
  • Safe way to share data when working remotely
  • Data integrity


What is tokenization?


Tokenization is the process of exchanging a token to access sensitive information. This token is a placeholder, there is no sensitive information stored on the token, and therefore, it cannot be reversed into the original data. It is good for structured data that need to be on file to verify identities and easily accessible.


To be able to gain access to the sensitive information, individuals in possession of the token have additional security checks and requirements to verify their identity. This adds a level of security, as the tokens cannot be used for fraudulent purposes. In the event that a cybercriminal steals your token, they have stolen nothing of real value, as they cannot access the sensitive data with only the token itself.


Examples of tokenization are:

  • Android Pay and Apple Pay
  • E-commerce sites
  • Organisations that keep a customer’s card on file


Benefits of tokenization:

  • Better protection against cybercriminals
  • More compatible with complying with industry and government standards
  • Less resource intensive than encryption
  • Enhances consumer trust





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