Payment encryption and its importance in payment security

As payment systems grow more complex and transaction volumes increase, the risks to sensitive payment data rise in tandem. Merchants face growing pressure to protect every digital transaction without adding friction. Encryption is central to meeting that challenge. It enables secure payment systems, defends against data breaches, and forms a critical line of defence against payment fraud.

What is payment encryption?

Payment encryption is the process of turning sensitive payment details — like credit card numbers or bank account information — into coded data that can’t be read without the right decryption key. The purpose is simple: make intercepted data useless to anyone who tries to misuse it.

For example, if someone tried to steal payment information during an online purchase, what they’d capture would be scrambled code rather than the actual card number. This makes encryption a core part of secure payment systems, especially in digital transactions where information is constantly moving across open networks.

How encryption works in payments

When a customer enters their card details at checkout, those numbers are immediately converted into ciphertext using mathematical algorithms. Only a payment processor or bank with the correct decryption key can turn that ciphertext back into the original numbers.

Many payment systems today use asymmetric encryption. This method relies on two keys: a public key to encrypt the data and a private key to decrypt it. Even if the public key is widely shared, the private key remains protected, which means only authorised parties can read the information. 

By contrast, symmetric encryption uses just one shared key for both encryption and decryption. While symmetric methods are faster, they require both parties to keep the same key secure, which can be harder to manage in large-scale payment systems.

All of this happens in a fraction of a second. The payment gateway sends the encrypted details to the processor, and the sensitive information never appears in plain text at any point. For the customer, the experience is seamless — the payment goes through without exposing their data.

Payment encryption vs. tokenisation

Encryption and tokenisation are often discussed together, but they serve different purposes. Tokenisation replaces sensitive payment data with a non-sensitive equivalent called a token. This token has no exploitable value and cannot be reverse-engineered.

Encryption, by contrast, protects the actual data by scrambling it using encryption keys. The key difference lies in how the information is protected: encryption masks data, while tokenisation substitutes it.

Consider a subscription service storing card-on-file credentials. The service provider might use encryption to protect the data during the initial transaction. Once stored, tokenisation replaces the actual card details with a token, reducing the risk of exposure. Used together, these methods strengthen the overall approach to payment security.

Payment encryption protocols and methods

Point-to-point encryption (P2PE)

Used primarily in in-store card-present environments, P2PE encrypts payment data at the point of interaction — typically the card reader — and keeps it encrypted as it moves through the system until it reaches a secure decryption environment. This reduces the risk of tampering at intermediate stages.

End-to-end encryption (E2EE)

E2EE protects data from the point it is entered by the customer (e.g., on a website or mobile app) until it reaches the payment processor. It covers a broader range of transaction types than P2PE and is especially relevant for e-commerce and remote payments.

SSL/TLS encryption

Secure Sockets Layer (SSL) and its successor, Transport Layer Security (TLS), are standard encryption protocols used to secure communications over the internet. They provide a secure tunnel between a user’s browser and the payment gateway, protecting data from interception during transmission.

AES (Advanced Encryption Standard)

AES is a symmetric encryption algorithm widely used across industries. It uses the same key to encrypt and decrypt data, making it fast and efficient. AES is often used in hardware encryption and in scenarios where data doesn’t leave a controlled environment.

EMV encryption

EMV stands for Europay, Mastercard, and Visa — the three companies that created the standard. EMV technology is used in chip cards and enables dynamic authentication for every transaction. Each transaction generates a unique cryptogram, making it difficult to clone the card or reuse data.

Benefits of payment encryption

• Reduces exposure to data breaches by making intercepted data useless to attackers
  
  
• Helps meet PCI DSS requirements, a must-have for handling credit card payments
  
  
• Protects payment data, including sensitive payment data such as cardholder details
  
  
• Supports secure payment systems, helping to avoid costly remediation after incidents
  
  
• Improves customer confidence, reinforcing trust in your brand’s payment experience

Best practices for using payment encryption

Combine encryption with tokenisation

Using tokenisation to replace stored card data reduces the surface area for potential attacks. Encryption secures data during transmission, while tokenisation limits exposure once data is at rest. Together, they provide layered protection.

Rotate encryption keys regularly

Encryption keys must be refreshed on a regular cycle to reduce the risk of compromise. A strong key management strategy should include scheduled rotation, access controls, and audit trails to monitor usage and changes.

Never store unencrypted payment information

Sensitive payment data, including credit card numbers and customer identifiers, should never be stored in plaintext. Ensure all data at rest is encrypted, and limit storage wherever possible to reduce regulatory scope and risk.

Layer encryption with other security tools

Encryption is one part of a broader strategy. Combine it with tools such as fraud detection systems, anomaly detection, and strong customer authentication protocols. This layered approach helps defend against increasingly complex threats.

Partner with a PCI DSS-compliant payment processor

A trusted payment processor should not only manage encryption keys securely but also continuously monitor and update their systems to maintain PCI DSS compliance. This reduces the burden on your internal teams while maintaining a secure environment.

Establish clear responsibilities and communication protocols with your payment processor. Ensure their systems support encryption standards that align with your security policies. Collaborating early and often allows you to quickly resolve issues, update configurations, and maintain a consistent standard across all payment touchpoints.

Conclusion

As payment fraud and data breaches continue to evolve, encryption remains a cornerstone of modern payment security. It protects sensitive payment data, maintains compliance with PCI DSS, and supports a secure, reliable payment experience.

Antom supports merchants with payment solutions built on robust encryption standards, helping you keep transactions secure across every channel. Whether you’re handling online checkouts, mobile wallets, or cross-border payments, building a secure payment system starts with the right encryption approach.