The Problems with On-Premise Tokenization

Many businesses like to handle their own data security. In theory, there is nothing wrong with that. Qualified security techniques should be just as applicable in an on-site application as a remote one, and in most cases there is little difference in terms of the level of security. An on-premise encryption or tokenization solution still protects your data.

That said, there are problems with using on-premise security solutions that many business owners don’t consider. Before you spend a large amount of money and time investing in and setting up your own tokenization system, consider the drawbacks you’ll encounter.

The Data is Still in Your Environment

By far the biggest advantage to a remote tokenization or data vaulting solution is that it removes sensitive data from your environment. For instance, when you tokenize data with a remote provider, the sensitive data itself is stored in your off-site data vault. The tokens that are returned to you for data management aren’t sensitive data themselves.

In contrast, when you run your own tokenization or vaulting system, the vault is still part of your environment. You incur all the risk of keeping it active and secure, and you must handle all of the burden of compliance. When it comes to regulated sensitive data such as payment card information or medical records, achieving compliance is a difficult and expensive undertaking. It can be easier and less expensive to limit the scope of your compliance by removing data and systems – but that solution is only possible when you store data off-site.

Data Security is Hard to Manage

Implementing an on-premise tokenization solution means that you have to manage and maintain the system from beginning to end. That includes the safe transmission and storage of the original sensitive data, the smooth exchange of data for tokens, and the proper implementation of tokens in your environment. Any one of these tasks is time-consuming and challenging for a business to handle alone, let alone all of them at once.

Furthermore, once you implement your security solution, you must manage access and education as well. Your employees will not automatically know how to handle your new security procedures – they will need to be taught about concepts like token management or encryption key management, sensitive data handling, and other processes that are necessary for your data’s safety.

On the other hand, an off-premise solution allows you to hand these tasks off and concentrate on your core business. You won’t have to devote countless hours to setting up and managing your data security system, and you won’t have to hire dedicated staff to keep your security system running smoothly.

Data Stored On-Premise is Never 100% Secure

The biggest drawback to any on-premise security solution, though, is that any data you keep in your environment is potentially vulnerable. Hackers and data thieves can gain access to even the most well-protected systems. If you’re keeping sensitive data anywhere in your network, you’re running the risk of that data being exposed or lost.

Off-premise solutions deal with this risk in several ways. For instance, strict access controls determine who in your environment is allowed to access data or perform certain actions like retrieving tokens or changing records. You can even restrict access to a certain set of IP addresses to make sure requests are coming from inside your network.

Another advantage of using off-premise data security is that you minimize your own risk obligation should any data breaches occur. You are not responsible for data that isn’t stored in your environment, meaning you don’t face any repercussions for a security problem. For businesses that have a limited budget to handle fines or damages from PCI or HIPAA breaches, this shift in the burden of compliance is a big help.

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Topic(s): tokenization

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