In a digital-first environment, securing sensitive financial data is more than a best practice—it's a necessity. In a recent Payments Podcast episode, Mark Bish, Principal Product Manager at Bottomline, examined how tokenization changes businesses' protection of bank account data in B2B payments.
Not Just for Credit Cards
When most people hear "tokenization" they think of credit and debit card security—specifically, PCI DSS compliance. But as Bish explains, there's a more advanced and business-focused form of tokenization that's gaining traction.
This version replaces sensitive bank account data with unique, randomly generated tokens that are useless to fraudsters but fully functional for payment processing.
What makes this approach even more powerful is its ability to verify the account holder at the same time. This dual function—data protection and identity verification—makes it especially valuable in the high-stakes world of B2B payments.
Where's the Risk?
Many businesses store bank account data in multiple systems, such as ERPs, CRMs, spreadsheets, payroll systems, and more. Each of these systems has varying levels of security, and the more places sensitive data is stored, the more opportunities there are for it to be compromised.
Bish outlined a common scenario: payment files are created in one system, passed through email or shared folders, and processed in another, often without encryption, audit trails, or verification.
This fragmented process creates a sprawling "risk surface" that's vulnerable to both external attacks and internal fraud.
How Tokenization Works
Tokenization simplifies and secures this process. Instead of storing or transmitting actual bank account numbers, businesses use tokens that are meaningless outside the payment system. When it's time to make a payment, the token gets matched with the verified account data behind the scenes.
This can be done via an API integrated into front-end systems or through a user interface for lower-volume systems like payroll. The result? A clean, secure payment file that contains only tokens, payment amounts, and dates—no sensitive data.
The tokenization service then enriches the file with verified account data, formats it correctly, and sends it downstream for processing. It's seamless and secure and reduces the risk of the account details being exposed if a data breach were to happen.
Insider Fraud: A Hidden Threat
One of the most compelling benefits of tokenization is its ability to prevent insider fraud. Bish explains that if employees can't access or alter real account numbers, they can't redirect payments or leak data. Even if someone tries to tamper with a payment file or copy a spreadsheet, the tokens are meaningless without access to the secure system that maps them to real accounts.
This simple change—replacing account numbers with tokens—removes a major vulnerability from the payments process. It's a powerful example of how a slight shift in technology can have a significant impact on security.
You Can't Stop Attacks—But You Can Minimize the Damage
Cyberattacks are inevitable. As Bish points out, fraudsters are constantly probing for weaknesses. But while you can't stop attacks, you can limit the damage. By removing account details from your systems, tokenization reduces the risk of account details being leaked if attackers gain access.
This is especially important given the recent high-profile breaches in UK retail, as one of many recent examples.
Where to Start: Practical Advice for AP Teams
Bish’s advice to accounts payable (AP) teams is clear: start by auditing your current processes. Identify where account data is stored, who has access, and how payment files are shared. Look for gaps in encryption, traceability, and verification.
Then, consider how tokenization can help. Removing bank account data from your systems not only reduces your risk. It simplifies compliance, improves auditability, and strengthens your overall security posture.
Tokenization is more than a buzzword. It's a practical, powerful tool for modernizing payment security. As businesses face increasing threats from both external hackers and internal actors, tokenization offers a way to reduce risk without sacrificing efficiency.
If your organization still stores and transmits sensitive bank account data, it may be time to rethink your approach.