Playing Token Trick Or Treat

Written by Walter Conway
September 30th, 2010

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

Next month, millions of adorable merchant IT executives will dress up and pretend to be responsible adults who are experts in all manner of security. They’ll walk down Tokenization Street, going from one security vendor to another, holding out their brightly colored IT environment bags and ask, “Token Trick Or Treat?” Some will get delicious chocolate, which will cost-effectively protect their payment data. Others, unfortunately—like CSO Charlie Brown—will get a rock.

How can you make sure you don’t get round dusty minerals that are overpriced and provide about as much true data security as a Jack-O-Lantern? It all comes down to knowing which houses to go to and which to avoid. Even more importantly, it’s about knowing which questions to ask.

Many retail CIOs are evaluating tokenization as a way to reduce PCI scope and, thereby, the total cost to achieve and maintain PCI compliance. The problem is that many tokenization options are available. How can you be sure that you not only pick the right approach for your company but realize the benefits you are paying for?

I won’t pretend to have all the answers. After all, with both software and hardware appliance packages in the market, things can get complicated quickly. Instead, I would like to offer a set of questions retailers need to ask—and have answered—before they commit to any approach. These questions are based on third-party products I’ve seen in the market, Visa’s recent guidance on the subject and, to a great extent, my own clients’ experiences. The list is not meant to be complete, but it should get you headed in the right direction—or at least help you avoid an expensive disappointment.

Tokenization is a data security technology that replaces primary account number (PAN) data with surrogate values, or tokens. Properly constructed tokens are not mathematically reversible, and the tokens can be removed from PCI scope. The appeal of tokenization is that it simplifies the process and reduces the cost of PCI compliance.

Encryption, on the other hand, is reversible and, as such, is not the same as tokenization. Furthermore, encryption does not take PAN data out of your PCI scope. Properly done, encryption may render your PAN data unreadable and, therefore, PCI compliant. But the data is still in scope.

Retailers have a number of tokenization options, including third-party token vendors, their existing application vendors who may offer a tokenization upgrade or even their payment processor or acquirer. A retailer also could develop a homegrown tokenization system. Although I would not recommend this last approach, the questions to be answered are pretty much the same.

Here, then, is this QSA’s list of questions for your consideration. You may have other questions—in fact, you probably will—but this list should get you started.

  • Have you found all your cardholder data?
    In other words, are you really ready to begin? It will be impossible to scope a tokenization project until you know where all your cardholder data is generated, stored and transmitted. And I mean all your data. A good place to start is with a complete cardholder dataflow diagram (you know, the one you developed for your QSA).

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