Tokenisation is used in the Payment Card Industry to replace sensitive data with innocuous substitutes that can easily be reversed when required. The data itself, should not be made easy to decipher, but the algorithm is what determines the strength and degree of the securitization of the tokenisation process.
Tokens can be used to protect sensitive data, such as driver's licenses, financial statements, medical and criminal records, stock trades and information that is normally classified as personal or PII.
The technology was developed to comply with industry and government standards. In the PCI, tokens are used to represent sensitive card-holder information, that is usually stored in separate databases, in off-site locations.
All organizations involved with storing, processing or transmission of card-holder information, are mandated to comply with the Payment Card Industry Data Security Standard or PCI DSS, which stipulates that credit-card data must be protected when it is accumulated.
Tokenisation, is the process that is used to replace the numbers of the credit cards, with a randomly generated string of numbers or characters. There are several methods used to format the tokens.
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