Tokenisation vs Encryption in Payments: What’s the Difference?
| Encryption | Tokenization |
|---|---|
| Mathematically transforms readable text into a secret or disguised way of writing text using an encryption algorithm and key | Randomly generates a token value for readable text and stores the mapping in a database |
| Managed to large data volumes with just the use of a small encryption key to decrypt data | Hard to scale securely and maintain performance as database increases in size |
| Used for structured fields, as well as unstructured data such as entire files | Used for structured data fields such as payment card or Social Security numbers |
| Perfect for exchanging sensitive data with third party partners and vendors who have the encryption key | Not simple to exchange data since it requires direct access to a token vault mapping token values |
| Format-preserving encryption schemes come with a tradeoff of lower strength | Format can be maintained without any diminished strength of the security |
| The initial data leaves the organization, but in encrypted form | The initial data never leaves the organization, satisfying certain compliance requirements |
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