Tokenization substitutes the sensitive data with a non-sensitive token and encryption is the process where the data is encoded in a way that cannot be read in the absence of an extraction key.
While both tokenization and encryption enhance data security, their approaches differ. Tokenization focuses on replacing data with unrelated tokens, minimizing the exposure of sensitive information, and simplifying compliance with data protection regulations.
When deciding between tokenization and encryption, it’s essential to weigh their respective pros and cons in the context of your specific needs. Both methods offer robust security, but their applications and strengths vary.
Below, we’ll unpack the differences between encryption and tokenization, including how both work, how they’re used, and what businesses need to know about using them together to keep payments systems secure.
Unlike encryption, which transforms data into a non-readable form using an algorithm and encryption keys, tokenization ensures that there is no mathematical relationship between the original data and the tokens.
In simple terms, Tokenization hides the original data behind a reference token stored in a secure vault, whereas Encryption scrambles data so that only authorized users with the decryption key can read it.
Encryption and tokenization are both methods used to protect sensitive data, but they differ in their approach. Encryption involves converting data into a coded format that can only be accessed with a decryption key, providing a secure way to transmit and store information.
