PCI-compliant tokens, or PCI tokens, are surrogate values that replace sensitive cardholder data, such as the Primary Account Number (PAN), to help businesses reduce their PCI DSS (Payment Card Industry Data Security Standard) compliance scope. These tokens are generated by a tokenization system. Typically, these tokenization systems are provided by a secure payment processor or token vault, like VGS, and are used to safely store or transmit payment information without exposing the actual card data.
When merchants use PCI-compliant tokens, they avoid storing raw cardholder data in their systems, thereby significantly reducing their PCI DSS compliance scope and lowering the risk in the event of a breach. Tokens can still be used for business functions like recurring billing, fraud detection, and analytics, without exposing sensitive data.