The Unexpected Benefits of Tokenization

Written by Walter Conway
December 7th, 2011

A 403 Labs QSA, PCI Columnist Walt Conway has worked in payments and technology for more than 30 years, 10 of them with Visa.

I am starting to see that one of the biggest benefits of tokenization might be the implementation process itself. That is, while using properly constructed tokens can reduce a merchant’s PCI scope, the process of planning, designing and implementing can produce significant benefits, too. One result from tokenization is restricting the further spread of cardholder data throughout the enterprise. Another is that the implementation process gives you a running start in complying with PCI version 2.0.

Tokenization requires a lot of work to implement. It would be a shame to not take full advantage of that work and the benefits that come from it.

The first step in tokenization is to identify all the people, applications and departments that currently use cardholder data. This step is not easy, and it requires both business and process knowledge that the IT department is unlikely to have. That means you need to involve the business side in the tokenization—and by implication the PCI compliance—process.

Including the business experts in PCI compliance is, therefore, often the first benefit. To implement tokenization properly you need to go beyond the usual cardholder dataflow diagram that tracks a card transaction from authorization to settlement. For example, do you currently send or receive primary account number (PAN) data from your acquirer as part of the chargeback or dispute resolution process? Does your call center ever include PAN data in its escalation procedure or E-mail messages? Does the anti-fraud department use PAN data for velocity checking, or does it provide PAN data to law enforcement agencies?

If the answer to any of the above questions is “yes,” then the next questions should be:

  • Is it worth the risk?
  • Do we still need to do things this way?
  • Can we change this process and reduce our risk and PCI scope?

The business people have detailed operational knowledge that IT staff working alone may lack. They can help pinpoint all the places card data (both electronic and paper) is used in the enterprise. On the other hand, they are also the ones who need to understand that “but we always did it that way” is not a compensating control.

A second benefit from tokenization is that you have to locate all your data. Many IT departments use an automated tool like a sensitive number finder to locate PAN data. For this approach to work, though, you need to know where to look. Although you should look for cardholder data everywhere, I don’t know many organizations that run regular searches on departmental devices they think are out of scope. A detailed joint IT-business review of all the enterprise’s activities can give you more confidence that you have really found all your in-scope systems, processes and devices.

Let me say from the outset that the process I’m describing is a lot of work, and the meetings will fill a lot of whiteboards. The team needs to find all the data repositories in the organization, locate all the paper files and reports (which can be digitized, so check the document management systems, too), understand all the back-office processes that use cardholder data, and challenge historic practices and procedures. My point is that because you are already doing the work as part of the tokenization process, you might as well get all the benefits.


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