Beyond Tokenization: The Industry’s Shift Towards Format Preserving Encryption (FPE)

Introduction

The landscape of data security is in the midst of a transformative shift, as Format Preserving Encryption (FPE) emerges as a viable successor to traditional tokenization. This shift is driven not only by advancements in cryptographic techniques but also by the official recognition of FPE as a NIST standard, as outlined in NIST 800-38G. This validation underscores FPE’s capabilities and positions it as a more effective alternative to tokenization.

Understanding Tokenization and Format Preserving Encryption (FPE)

For those unfamiliar with these terms, let’s briefly explore their definitions:

Tokenization involves substituting sensitive data, like credit card numbers, with non-sensitive tokens, which are stored securely in a separate database called a token vault. However, as we dig deeper, it becomes evident that tokenization has its inherent limitations.

Format Preserving Encryption (FPE), endorsed by NIST, is an advanced encryption technique that transforms data into an encrypted format while preserving its original structure. For instance, a 16-digit credit card number encrypted with FPE will still be a 16-digit number. This feature ensures compatibility and functionality within systems.

This blog post not only uncovers the historical context of these methods but also emphasizes their strengths and limitations. Additionally, we highlight FPE’s significant role, backed by NIST standards, in steering the shift from tokenization to a more advanced data security era characterized by heightened protection and practicality.

Understanding Tokenization’s Primary Weaknesses

While tokenization offers valuable advantages in data security, it’s essential to also recognize the challenges and limitations inherent in this approach. These weaknesses, while not diminishing the importance of tokenization, shed light on areas where alternative methods like Format Preserving Encryption (FPE) can offer enhanced solutions. Let’s delve into these weaknesses to gain a comprehensive understanding of tokenization’s intricacies.

1. Attack Surface Expansion: Tokenization introduces an additional component—the token vault—which, if compromised, could expose both the tokens and the original sensitive data, thereby broadening the potential attack surface.
2. Compatibility and Integration Challenges: Implementing tokenization often requires modifications to existing database structures and applications, leading to complexities and potential compatibility issues that can disrupt established systems.
3. Limited Data Format Preservation: Tokenized data might not always perfectly preserve the original data’s format, potentially causing issues when integrating tokenized data into certain systems or processes.
4. Risk of Token Reversal: In certain cases, tokenization schemes can be susceptible to reverse engineering, potentially leading to the recovery of the original data from the tokens.
5. Operational Overhead: Managing tokenization systems, including token vaults and maintenance, can introduce operational overhead that requires resources, time, and expertise to maintain effectively.

The Benefits of FPE

Format Preserving Encryption (FPE) emerges as a robust alternative to traditional data protection methods, offering a unique set of advantages that address the limitations of existing approaches. By seamlessly blending encryption with data format preservation, FPE introduces a transformative approach to data security.

1. Format-Preserving Transformation: FPE encrypts data while retaining its original format, ensuring compatibility with existing systems and applications. This characteristic streamlines integration efforts and minimizes disruptions during implementation.
2. Reduced Data Exposure: FPE encrypts data at its source. This minimizes the risk of additional attack vectors and data exposure, enhancing overall security posture.
3. Minimal System Changes: FPE’s seamless integration requires minimal adjustments to databases and applications. This simplicity speeds up implementation, reduces potential compatibility issues, and ensures business continuity.
4. Scalability and Adaptability: As data volumes grow, FPE scales efficiently without necessitating significant modifications to infrastructure. This scalability ensures smooth data management, even in dynamic business environments.
5. Regulatory Compliance: FPE aligns with major security standards, such as PCI-DSS, HIPAA, and GDPR. This compliance support assists organizations in meeting regulatory requirements while safeguarding sensitive information effectively.

Six Advantages of FPE Over Tokenization

Flexibility and Compatibility:

FPE’s standout feature lies in its flexibility. Unlike tokenization, which necessitates adjustments to the database schema for token accommodation, FPE retains the original data format. This minimizes system complexities and compatibility concerns. Whether encrypting data at a field, file, or database level, FPE ensures seamless integration without system disruptions.

Reduced Data Exposure:

Tokenization involves moving sensitive data to a separate vault, inadvertently creating a new target for hackers. FPE, however, encrypts data at its source, eliminating the need for a separate vault and thereby mitigating potential exposure risks.

Smooth Integration:

FPE seamlessly integrates into existing systems with minimal modifications. Tokenization, in contrast, demands significant alterations to databases and associated applications. FPE’s uncomplicated integration streamlines the transition towards a secure environment, saving time, costs, and resources.

Scalability and Maintenance:

Scalability concerns tied to maintaining an expansive token database vanish with FPE. In contrast, tokenization’s expansion requires growing the token vault, introducing additional risks and costs. FPE accommodates data growth effortlessly, ensuring low maintenance and efficient scalability.

Regulatory Compliance:

FPE aligns with major security standards like PCI-DSS, HIPAA, and GDPR, guiding businesses in handling sensitive data. Opting for FPE ensures adherence to regulatory requirements and maintains a robust security posture.

Cost-Effectiveness:

FPE’s cost-effectiveness shines through. Tokenization involves managing multiple databases or tables, leading to higher licensing, support, and compute costs. FPE eliminates the need for such complexities, resulting in substantial savings on licensing, support, and computational expenses.

Comparing Tokenization and FPE in a Real-World Scenario

Consider a multinational retail corporation with an extensive customer base. The company relies on a complex IT infrastructure to manage millions of transactions daily, each involving sensitive credit card data. Let’s examine how tokenization and FPE perform in this scenario:

Tokenization Approach:

In the tokenization approach, the retail giant opts to tokenize credit card data for payment processing. However, this requires modifying the existing database schema to accommodate the token vault. This adjustment introduces complexities and potential system compatibility issues. As the business grows, scaling the token vault becomes essential, leading to increased operational risks and higher costs. Moreover, the token vault represents an additional attack surface, which hackers could exploit.

Format Preserving Encryption (FPE) Approach:

Conversely, the retail corporation embraces FPE for data protection. With FPE, the original data format remains intact, eliminating the need for significant database schema alterations. The encrypted credit card numbers still adhere to the 16-digit structure, maintaining system compatibility. As the business scales, FPE effortlessly accommodates the growing data load without introducing scalability concerns or the need for extensive maintenance.

Embracing the Future: FPE’s Reign in Data Security

In the context of data security, Format Preserving Encryption (FPE) has become the widely adopted option. The practical advantages we’ve discussed position FPE as the standard solution for safeguarding sensitive data. Its seamless integration, reduced exposure risks, and adaptability have solidified its role in data protection strategies.

Tokenization’s complexity and limitations are now being replaced by FPE. FPE’s practicality, compatibility, and alignment with security regulations naturally make it the practical choice. The shift towards FPE aligns with the evolution of data protection.

In an environment that values adaptability, choosing FPE equips organizations to address current challenges and future uncertainties. As data protection norms continue to develop, FPE remains a steadfast standard, empowering businesses to navigate the future of security effectively.

Choosing FPE for Enhanced Customer Experience at Ubiq

At Ubiq, our data security approach echoes the key points outlined in this article. We’ve assessed the tangible benefits that Format Preserving Encryption (FPE) offers, particularly in structured data encryption scenarios. The practical advantages such as flexibility, seamless integration, minimized data exposure, and compliance with security standards have driven our strategic adoption of FPE.

To keep up with our research and cryptography content, make sure to subscribe to our blog in the page footer below.