Tokenization
The concept behind tokenization is remarkably simple: Data thieves can't steal what isn't there.
Tokenization intercepts your card information at the point-of-sale terminal or online payment interface and replaces your cardholder data with randomly generated proxy numbers, or tokens. The transaction then continues, under an assumed name as it were, through the normal authorization process.
The biggest difference: Your card data is never stored intact anywhere, making it nearly impossible for hackers to reassemble it through decryption or reverse engineering.
Hack into your merchant's database or that of the payment processor and all you'll receive for your trouble are worthless tokens.
The only place your card data actually resides is at the data facility of the third-party provider that administers the tokenization program. But hack into their databases and all you'll find is the digital equivalent of jigsaw puzzle pieces scattered across multiple locations.
