Vaultless Tokenization vs. Vault Tokenization

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Vaultless Tokenization vs. Vault Tokenization

Tokenization refers to the process of transforming highly sensitive data into non-sensitive data known as “tokens” They can be used in an internal system or a database without bringing it into scope.

Tokenization has the ability to play a vital role in securing highly sensitive data. It is done by replacing the initial data with an unrelated value of the same length as well as format. After tokenization, the tokens are sent to the internal systems of an organization for use, and the initial data is stored securely in a token vault.

Contrary to encrypted data, tokenized data is completely irreversible and undecipherable. This is particularly an extremely important distinction since there is no mathematical relationship between the token and its initial number, and the tokens cannot be returned to their initial form.

Purpose of Tokenization.

Tokenization’s purpose is to swap out sensitive data like card details or bank account numbers with a randomized number in the same format but without any intrinsic value of its own. It is different from encryption where a number is mathematically changed, but its initial pattern is still stored within the new code referred to as format-preserving encryption.

But the aim of tokenization is to remove all sensitive information or data from the business systems and replace the same with an undecipherable token and storing the initial data in a secure cloud data vault. Encrypted data or information can be decrypted with the help of the appropriate key but tokens cannot be reversed, because there is no mathematical relationship between the token and its initial number.

Different Types of Tokenization(Vault vs Vaultless tokenization).

There are two different types of tokenization.

Vault Tokenization –

In vault tokenization, a secure database is maintained which is referred to as a tokenization vault database. All sensitive data and information along with its non-sensitive counterparts are stored in the tokenization vault database. This table consisting of both sensitive as well as non-sensitive data can be used to detokenize the newly tokenized data.

Detokenization, as can be understood from the name, refers to the reverse process of tokenization. In this process, the initial data is obtained from the tokenized data in the vault. To state the same in other words, it can be said that non-sensitive data is replaced with sensitive data for getting back the initial data.

Vaultless Tokenization – 

Vaultless tokenization, as indicated by the name, does not involve the use of a vault for storing the data or information. It is a much more efficient as well as a safer process as compared to vault tokenization. It is because of the fact that it does not maintain a database. Vaultless tokenization instead makes use of highly secure cryptographic devices.

Secure cryptographic devices here refers to the devices that use standards-based algorithms for the conversion of highly sensitive data or information into non-sensitive one or for generation of tokens. Now, for the purpose of detokenization, these tokens can be used for generating the original data without the requirement of a tokenization vault database.

Working of Vault vs Vaultless Tokenization!

Vault tokenization makes use of a database, or tokenization vault for the purpose of storing a mapping between the tokenized sensitive data, like a credit card number, account number, and their corresponding token. On the other hand, vaultless tokenization generates the token uniquely with the help of an algorithm. Whenever the need for detokenization arises, the token can be readily used for the determination of the initial value without the requirement of a tokenization vault to search for it.

Speaking in terms of token schemes, both vault tokenization, as well as vaultless tokenization, allow retention of elements of the initial data, like the first and last four numbers of credit card primary account numbers. Although vault tokenization allows the selection of numeric payment card information tokens, all vaultless tokens consist of alphanumeric values from the parts of the credit card primary account number that are retained. For a number of users, this might not be an issue but for the ones with specialized or numeric token schemes, vault tokenization would be the more preferred platform.

Moreover, it is also quite important to note that the service provider does not have a repository of the tokens generated by the users. It is because of the fact that vaultless tokenization does not make use of a database for storing the tokens. If the users intend to retrieve any of the data that was tokenized previously, they can easily do so by giving their service provider a batch file that contains the tokens. Both vault tokenization as well as vaultless tokenization support batch-file tokenization.

Benefits of Vaultless Tokenization Over Vault Tokenization.

With the increase in the size of data, the size of the vault database also increases. This, in turn, increases the total time taken for the process of detokenization. At the same time, it also increases the overall time taken for the process of implementing detokenization. To appropriately deal with this drawback of vault tokenization, vaultless tokenization comes to the rescue.

One of the major benefits of vaultless tokenization is reduced latency. It results in a much more responsive platform. The reduced latency comes to notice particularly at the time when a very big batch file is being processed. With the use of vaultless tokenization, there is no replication of token vault effectively dropping the recovery point objective or recovery time objective in the case of a catastrophic outage to zero, thereby increasing availability.

Moreover, the responsiveness of the platform also increases since there are no database reads or writes when vaultless tokenization is used. In one API call, this improvement seems to be negligible, but at the time when a batch file of a very big size is being processed, the quicker processing certainly comes with a noticeable impact.

Future of Vaultless Tokenization

The major driving force behind the development of vaultless tokenization is providing the appropriate solution to the rising number of data-localization regulations globally. Tokenization can play a significant role in appropriately securing and de-identifying nearly all sensitive data or information for necessarily meeting all of the international regulatory compliance obligations in the best possible manner. This, in turn, very clearly indicates the huge scope of vaultless tokenization in the time to come.

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By |2022-03-08T10:08:47+05:30July 15th, 2021|Blockchain|Comments Off on Vaultless Tokenization vs. Vault Tokenization

About the Author:

Sonal Mehta is a Content Lead at Solulab, USA based leading Blockchain Technology, mobile apps and software development agency, started by Ex vice president of Goldman Sachs, USA and Ex iOS lead engineer of Citrix. Solulab help build startups - we are a no-sweat technical partner for early stage entrepreneurs to launch ideas from scratch and for later stage startups to build more quickly and affordably.


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