In an era where data breaches can cost millions and cause reputations to crumble overnight, protecting sensitive information is no longer optional. For merchants, handling details like access credentials, customer information, and especially payment data comes with a heavy security and compliance burden. Not to mention, stringent controls on how data is stored and accessed can make it feel like jumping through hoops.
Token vaults ease that burden by strengthening security and introducing a layer of flexibility that traditional data storage methods lack. By decoupling sensitive information from business systems and replacing it with tokens, merchants can safely route data across services, streamline integrations, and adapt to new workflows or regulatory environments without reengineering their entire infrastructure.
Token vaults provide a smarter, more flexible path forward, dramatically reducing the scope of PCI DSS compliance and enabling merchants to scale, adapt, and innovate without compromising security.
So, what is a token vault? This article will provide you with a comprehensive understanding of everything you need to know, including their purposes, role in merchant security, use cases, and how they work, particularly in the context of credit card processing and facilitating business growth.
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In the simplest terms, a token vault is a secure environment where privileged data is stored in tokenized form. In the same way that a bank uses a physical vault to store valuables, a token vault is used to protect sensitive digital information from unauthorized access.
Token vaults are used across various industries but are most commonly associated with payment processing. However, rather than storing real credit card numbers, which makes a business vulnerable to data breaches, a token vault swaps out the sensitive information for a unique identifier and stores this instead. This data placeholder, or token, can be accessed through the vault by authorized users only, creating an ultra-secure environment for storing confidential information.
Token vaults have a slew of features that make them not only practical but essential for businesses handling financial transactions. These vaults offer secure, encrypted storage, stringent access control, and dynamic token generation to always keep the real sensitive information away from prying eyes.
They also provide continuous logging, which comes in handy for compliance reasons, on-demand token distribution, and act as a central, trusted authority when it comes to managing sensitive data.
Payment gateways typically have their own tokenization process to protect cardholder data. This means that, in theory, on the merchant side, there’s no need to implement additional tokenization infrastructure to secure data while processing payments.
But this also means that gateways work with their own individual tokens that can only be used within the same ecosystem. In essence, a token issued by Stripe can only be used on Stripe – it can’t be used on Adyen or a different gateway.
As a workaround, universal token vaults emerged as a handy solution that allows merchants greater versatility when it comes to tokenization, as well as integrations with multiple payment gateways, card networks, and third-party services, bypassing vendor lock-in.
With a universal token vault, a merchant is no longer tied to specific token providers since the tokenization process is handled by a neutral third party for enhanced security, storage, and PCI DSS compliance. With universal token vaults, businesses are able to centralize their tokenization efforts, scale by using multiple providers, and work with various gateways rather than being trapped by a single provider.
To truly grasp the concept of token vaults, it’s worth understanding how they work. It’s a pretty similar process from start to finish for all industries, beginning with the input of cardholder data, followed by the tokenization of the information, secure storage, and the use of tokenized data.
Here’s a closer look, specifically when it comes to tokenization for payment processing, though the process is similar for all types of data.
It all begins when an application like a payment page receives sensitive data like a credit card number from a user. The application sends this credit card number to a token vault and requests that a token is generated to act as a stand-in for the actual credit card number.
When a token is requested, the vault will generate a unique identifier (for example a string of alphanumeric characters with dashes and underscores) to represent the original credit card number. During this process, the token vault will also map the original credit card number to the unique token that’s kept secure in the vault. This will allow the token to be tied to the credit card number as needed to process future payments, available only to authorized parties through strict access controls.
Kind of like dropping your car with a valet and receiving a ticket for it. Only the valet knows which vehicle belongs to each ticket.
The credit card data is stored securely in the token vault, while the tokenized data is used within the merchant’s system. This ensures that instead of real credit card numbers floating around, all sensitive information remains protected and out of the hands of intruders.
To expose the data, token vaults can have strict role-based access controls that allow only the relevant parties at the appropriate times to link the tokenized data to the actual credit card numbers in order to process a payment, for example.
The bottom line is that if someone hacks into the merchant system, only useless tokens are exposed, not real sensitive data.
When it’s time to run a transaction, the merchant or an authorized system sends a token back to the vault to access the real data (in this case, the credit card number). The token vault verifies that the requestor is authorized, retrieves the original data, and returns it securely.
This ensures that only authorized systems can access tokenized data. Without authorization, it’s impossible to de-tokenize the data, protecting sensitive information from exposure. This is the power of token vaults: everyone aside from authorized parties only sees useless tokens that cannot be used on their own.
There are instances where data needs to be de-tokenized in real time - and more modern token vaults are built to handle that too. For example, a vault can intercept server-to-server requests or file uploads and automatically replace tokens with the actual sensitive card data on the fly. This allows the data to be processed by an authorized system, such as a payment gateway, without having to access the real data from the merchant side.
This means greater protections across all merchant systems, even those that were designed to handle sensitive data. It also lowers the scope of compliance for PCI DSS. This is extra handy when thinking about APIs since the merchant can configure the gateway to automatically tokenize specific types of data beyond only credit card numbers before saving them to the system.
Token vaults play a huge part in digital security and are paramount for maintaining a secure business environment for industries that handle confidential data, namely merchants who process credit card payments.
Here’s a quick breakdown of some of the main reasons why token vaults are crucial for any business that handles sensitive customer information.
Through centralized token management, token vaults ensure that all sensitive data is stored in a single secure place, reducing the surface area available for an attack or data breach.
By simple logic, the more places a credit card number passes through, the more chances there are for it to be exploited. Token vaults reduce these chances by handling everything in a single protected area.
Beyond this, token vaults require strict authorization to access the data. Only verified users can access tokens and are only able to access the data that they need rather than everything all at once. This way, if access is compromised, the vast majority of data remains protected. Plus, since all activity is logged through token vaults, it’s much easier to identify and shut down suspicious behavior or potential threats.
Token vaults also regularly shuffle around information to make it untraceable and distribute temporary credentials that expire, limiting access time and reducing long-term data exposure, significantly cutting back on the risk of any type of breach.
As a quick refresher, PCI DSS, or Payment Card Industry Data Security Standard, is a set of security standards surrounding credit card processing designed to keep customer information safe from fraud and data breaches on the merchant side. In other words, PCI DSS ensures that, as a customer, your credit card information is secure with any business you pay, either in person or online.
But, as a merchant, complying with PCI DSS is an intense, costly process. However, the scope of compliance can be lowered with tools like token vaults that allow businesses a workaround for handling customer card data.
Because token vaults swap out card numbers for tokens, merchants do not need to store or even touch credit card information at all – they only need to work with tokens. Tokens cannot be exploited by bad actors and reduce the scope of compliance because the real data is never saved in the merchant system.
Here’s a concrete example:
A website receives a payment for a good or service. Instead of receiving the actual card number for the purchase, the card data is collected by a third party vault provider as part of a hosted checkout page. The token vault replaces the card number with a token before passing it to the merchant system, ensuring that the actual credit card number is never processed, stored or transmitted.
Because the merchant system never touches the card information, it qualifies for the lowest PCI DSS scope: SAQ A.
One of the most significant benefits of using a token vault is that it offers merchants tremendous flexibility by allowing them to work with various vendors without any lock-in. This is especially true when thinking about universal token vaults, which allow merchants to collect and deploy payment data across multiple integrations, allowing for full flexibility and integration.
Traditionally, merchant applications require hardcoded credentials that tie the business to specific vendors or services, making it costly (and even impossible) to switch over if needed. Without a token vault, these credentials are nearly impossible to revoke from vendors and can be leaked during storage or the retrieval process.
However, when a merchant uses a token vault to centralize and protect data, especially for payment processing, credential storage is no longer necessary. Instead, applications request credentials dynamically through the vault on demand, creating a safer, more universal network that’s easier to maintain on the merchant side without tying the business to specific vendors or services. If a merchant switches vendors, only the vault configuration gets updated, not every single application.
Universal token vaults also make it significantly easier for a merchant to integrate additional providers and implement multi-cloud setups without being locked into any specific payment ecosystem.
While token vaults are commonly associated with payment processing, they’re used across different industries as a way of protecting Personally Identifiable Information (PII) like names, email addresses, ID numbers, login usernames, phone numbers, customer data, and beyond.
When a customer makes an account on a merchant website to complete a purchase, a token vault can be used to store and protect the PIIs related to the login information, customer shipping details, contact data, and more. The next time the customer visits the merchant website to make a purchase, the token vault can retrieve the customer’s account details, despite not being stored in the merchant’s system.
As another example outside of payments, in the healthcare industry, token vaults are often used to secure access to patient information and individual health records from exposure to unauthorized parties. This ensures compliance with privacy regulations like HIPAA and, of course, best practices as related to security.
At the end of the day, token vaults can be used to store and secure any type of sensitive, private, or personal information that needs to be protected.
Token vaults are used across different industries to manage secure data related to credit card numbers and confidential personal information while upholding best practices related to data security. These are some everyday use cases for token vaults to help understand when and how they can be leveraged.
Without token vaults, everyone’s credit card information would be floating out in the wild, ripe for the taking. However, token vaults emerged as a solution to protecting customer payment data by storing the real card information securely and returning a token that represents it when needed. Only the vault is able to map the token back to the actual card information, keeping it completely protected while still providing centralized storage and access when needed.
Additionally, token vaults allow merchants to issue dynamic credentials for payment gateways instead of needing to hardcode them. So even if an app needs to interact with a payment API to, say, charge a card, the token vault will spit out credentials in the moment and then rotate them automatically to reduce breach risk.
Finally, token vaults generate extensive, detailed audit logs of data access. This is in line with PCI DSS and other compliance standards, as well as for reporting and incident response purposes.
To recap, some of the main benefits of using token vaults in the financial and payment space include:
Token vaults are largely responsible for ensuring smooth, protected e-commerce transactions and a secure merchant environment for customer data.
E-commerce differs from typical payment processing because merchants must collect significantly more data to carry out the purchase, like a name, phone number, shipping address, and, of course, credit card information. Because of the large amount of customer information, it’s crucial for merchants to protect the data through secure storage and limited access in order to reduce data breaches and meet compliance obligations.
Token vaults in e-commerce scenarios tokenize the credit card numbers and return a payment token that has no value if exposed. The vaults can also generate user tokens to represent the customer ID to obscure Personally Identifiable Information (PIIs). So, ultimately, the merchant never stores the real card data and uses tokens to return payment and customer information to allow for recurring purchases while maintaining a secure environment with constant logging.
Universal token vaults also facilitate the interaction between the merchant and third-party payment gateways like Stripe and PayPal and shipping APIs like UPS and FedEx. The vault manages the credentials and distributes them dynamically, on demand. This prevents accidental leaks and eliminates vendor lock-in, enhancing flexibility on the merchant side.
When it comes to e-commerce and customer data privacy, the key uses of token vaults are:
Cloud storage is the norm for most businesses, especially those operating at an enterprise level. However, storing information, especially sensitive data, in the cloud has plenty of associated risks, many of which can be mitigated by using a token vault.
Token vaults are able to secure access to sensitive information on an enterprise level, like customer documents, application backups, activity logs, company media, and personally identifiable information (PIIs). Through dynamic access, a token vault can generate temporary credentials for applications that expire automatically. This prevents static credentials from leaking and enables time-bound access to sensitive data, often on a granular level and only to the specific applications that make the request.
These vaults can also limit access based on distinct parameters, such as a time of day, a specific bucket, or a particular user/application/service. This creates strong access controls for sensitive data at an enterprise level and extensive logging for compliance reasons.
In terms of a broader enterprise environment, token vaults uphold the same benefits: limited user access, third-party integrations without vendor lock-in, and a dynamic, secure storage environment.
Features include:
Token vaults are typically managed by Token Service Providers (TSPs), which are companies devoted to overseeing the tokenization process from start to finish. This includes generating, issuing, and mapping tokens to data, as well as handing access controls and token storage.
Token service providers, like PCI Proxy, are a cost-effective way for merchants to increase security for payment processing while reducing the scope of PCI DSS compliance. You can think of TSPs as all-in-one solutions for universal token vault management, making them a practical option for most businesses.
On the other hand, some merchants may choose to manage their token vaults solo, which gives them total control over the tokenization process but also puts all of the infrastructure responsibility – and associated costs for implementation, management, and compliance – on the organization.
If you’re ready to work with sensitive data without the associated headaches, PCI Proxy’s universal token vault provides merchants with endless flexibility coupled with industry-leading security features. In addition to tokenizing any type of data, our universal token vault provides extensive reporting, simplified token management, and reduced PCI DSS compliance scope.
Ready to take control of the token lifecycle? PCI Proxy can help. Click here to learn more.
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