In PCI DSS terms, what does "encryption" refer to?

In the context of PCI DSS, "encryption" specifically refers to the process of converting data into a secure format that is unreadable to unauthorized users. This process ensures that sensitive information, such as cardholder data, is protected from being accessed or understood by individuals or systems that do not have the proper authorization to view it. Encryption plays a crucial role in safeguarding data during storage and transmission, making it a fundamental aspect of securing payment card information and maintaining compliance with PCI DSS requirements.

The other options deal with distinct security practices. Backing up data is essential for data recovery but does not inherently secure it from unauthorized access. Assigning permissions regulates who can access data but does not change the data's format to protect its confidentiality. Masking data visually only obscures portions of it but does not provide the same level of protection as encryption, which secures the data as a whole. Thus, only the first choice accurately defines encryption in the PCI DSS framework.