What is tokenization in privacy?

Tokenization is a data protection technique that replaces personal or sensitive information, such as an email address or payment card number, with a substitute code called a token. Systems use this code in place of the original information, reducing how often that information needs to be shared or accessed.

For example, a company could replace a customer’s email address with customer_7K92 in its analytics records. Analysts could group purchases under that code without seeing the email address. In a vault-based system, the link between the code and the original value is kept in a separate, protected database.

Tokenization can help organisations:

• Reduce the appearance of direct identifiers in working datasets.

• Link authorised records without repeatedly exposing the original value.

• Restrict recovery of the original information to permitted systems or users.

The ICO’s guidance on tokenisation-based pseudonymisation explains its use as a privacy safeguard.

Tokenization does not necessarily produce anonymous information. If a person can still be identified through a mapping or other available information, the data can remain personal data. A stable token may also allow activity to be linked over time.

The difference between anonymization and pseudonymization is therefore important: replacing a visible identifier reduces exposure, but does not automatically remove data protection obligations.