Encryption vs Tokenization – Key Differences, Advantages, & Use Cases Explained

Personal data protection basics are important. While the most of us are not considered “high-value targets” by the perpetrators of fraud and cyber theft, it bears value to understand how you and the companies you do business with can more effectively prevent sensitive information being exposed. The tokenization of sensitive data and internal encryption of data are two of the effective tools that are being implemented more widely.

While tokenization and encryption both effectively obfuscate sensitive data, they are not the same thing, and they are not substitutable. Each has its own strengths and weaknesses, and organizations should opt for one or the other based on their strengths and weakness to secure data under different circumstances.

In the case of the electronic payment industry, both method is typically recommended and used to secure data end-to-end.

Employing encryption and tokenization in tandem has proven effective. Those trusted with curating sensitive data have turned to expanded network monitoring practices as well, augmenting the lock-down of data access and use capacities discussed in the article. Expanded use of identity authentication (e.g. biometrics) and machine learning are being employed to recognize activities that do not fit the regular behavior of a network participant. While there will never be absolute data security, the employment of various methods can make it so the black-hats’ activities may be more easily detected and the impact mitigated in a timely fashion.

Mercator Advisory Group looks into several of these area of expanded focus in the payment industry in Eight Technologies That Will Impact Payments and Banking Going Forward.

Overview by Joseph Walent, Senior Analyst , Emerging Technologies Advisory Service at Mercator Advisory Group

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