What is the purpose of truncation in data handling?

Truncation serves a specific purpose in data handling, particularly in relation to payment card information, which includes the Primary Account Number (PAN). The correct choice highlights that truncation involves modifying the PAN by removing a segment of it, typically preserving only the last four digits. This method makes the complete PAN unreadable while still allowing for reference or identification of transactions without exposing sensitive information.

This practice is particularly significant in the context of PCI DSS compliance, where protecting cardholder data is paramount. By using truncation, organizations can reduce the risk of sensitive data exposure while still maintaining some level of traceability for credit card transactions. As a result, businesses can fulfill regulatory requirements while also ensuring that cardholder data is handled securely.

The other options do not correctly align with the purpose of truncation. For instance, while hiding data during transmission is an important aspect of data security, it pertains more to encryption and secure transmission methods rather than truncation. Similarly, encrypting data before storage is a different security measure focused on protecting data confidentiality, and creating multiple copies of the PAN does not align with truncation's function, which is to minimize data exposure rather than increase it.