Tokenization Law and Legal Definition

Tokenization is the process of replacing sensitive data with unique identification symbols that retain all the essential information without compromising its security. Tokenization has gained popularity as it is a means of bolstering the security of credit card and e-commerce transactions. Tokenization minimizes the cost and complexity of compliance with industry standards and government regulations.

Tokenization makes it more difficult for hackers to gain access to cardholder data. Tokenization keeps sensitive information out of the data stream and thereby improves encryption technology. With the increase in identity theft, many corporations are turning to tokenization to minimize exposure and cost while maximizing the security of their customers and their own. Tokenization technology can be used with sensitive data of all kinds.