In today’s world, credit cards are an essential part of our daily lives. They make transactions easy and convenient, but they also come with a risk of fraud and identity theft. This is where credit card tokenisation is a secure solution to protect your credit card information.
What is Credit Card Tokenisation?
Credit card tokenisation is the process of replacing sensitive credit card information with a unique token. The token is a random set of characters that can be used to identify the credit card, but it doesn’t contain any actual credit card details. This token can then be used for transactions, and if any data breaches occur, the actual credit card information remains secure.
How Does Credit Card Tokenisation Work?
When a credit card is used for a transaction, the credit card details are encrypted and sent to the payment processor. The payment processor then generates a unique token and stores it in its database, along with the encrypted credit card details. The token is then returned to the merchant, who can use it for future transactions.
Also Read: What are Virtual Credit Cards?
When a customer wants to make another transaction, they provide the merchant with the token instead of their credit card information. The merchant sends the token to the payment processor, which uses it to retrieve the encrypted credit card details. The payment processor then processes the transaction as usual.
Benefits of Credit Card Tokenisation
- Increased Security: Credit card tokenisation reduces the risk of fraud and identity theft. If a hacker gains access to a merchant’s database, they won’t be able to retrieve any credit card information because it’s encrypted and replaced with a token.
- Simplified Compliance: Credit card tokenisation makes it easier for merchants to comply with Payment Card Industry Data Security Standards (PCI DSS). These standards require merchants to protect their customers’ credit card information, and tokenisation is an effective way to do so.
- Improved Customer Experience: Credit card tokenisation makes the checkout process faster and easier for customers. They don’t have to enter their credit card information every time they make a purchase, and they can be confident that their information is secure.
Credit Card Limit and Tokenisation
Credit card limit is the maximum amount that a credit card issuer allows a cardholder to borrow on a credit card. When a customer applies for a credit card, the issuer will assess their creditworthiness and assign a credit limit based on their income, credit score, and other factors.
Credit card tokenization doesn’t affect the credit card limit. The credit limit is still applicable when a customer uses their credit card, whether the transaction is tokenized or not. However, credit card tokenisation can help customers stay within their credit limit by providing an easy and secure way to track their transactions.
Credit card tokenisation is a secure solution for protecting credit card information and reducing the risk of fraud and identity theft. It’s a simple and effective way for merchants to comply with PCI DSS and improve the customer experience. While credit card limit remains applicable, tokenisation can help customers stay within their limits by making it easier to track their transactions. By adopting credit card tokenisation, merchants and customers can enjoy the convenience of credit cards without the risks.