Tokenization

Tokenization replaces sensitive data (Primary Account Numbers, PII) with a non-sensitive, algorithmically-generated surrogate token, rendering stolen data useless.

Tokenization is a critical data security technology: It substitutes a sensitive data element (e.g., a 16-digit credit card number) with a non-sensitive, random alphanumeric string token. The original data is securely mapped and stored in an isolated token vault. This process is non-reversible; the token holds no intrinsic value, drastically reducing the scope of compliance for standards like PCI DSS and GDPR. A transaction system uses the token for processing, while the actual Primary Account Number (PAN) remains isolated, minimizing breach exposure and liability across the enterprise.

https://www.ibm.com/topics/tokenization