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Have you heard about credit card tokenization yet? It’s the latest technology aimed at helping e-commerce merchants, retailers and banks comply with PCI standards. It was specifically designed to help make industry wide credit card processing system standards easier to meet.

If you have merchant accounts you need to manage, it is a great way to avoid storing and transmitting credit card numbers used in transactions. It can help you achieve the same goals as more expensive encryption systems, but requires only the installation of a driver right on your POS system.

How does it work? Credit card numbers are automatically assigned and replaced by a token set of 16 random digits. Real credit card numbers are eliminated, and tokens cannot be used for purchases. This enables businesses to protect their clients from fraudulent charges, and it also allows them to achieve compliance with PCI standards regarding the transmission and storage of credit card data.

Tokenization is a much more cost-effective way to handle credit card transactions responsibly than other systems. So far, it also seems to be effective at protecting credit card owners and satisfying PCI standards. As with any new technology, it remains to be seen whether tokenization will be a long-term solution to what’s become a major concern for just about every payment processing company out there today.

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