We present a polarimetric-based optical encoder for image encryption and verification. A system for generating random polarized vector keys based on a Mach-Zehnder configuration combined with translucent liquid crystal displays in each path of the interferometer is developed. Polarization information of the encrypted signal is retrieved by taking advantage of the information provided by the Stokes parameters. Moreover, photon-counting model is used in the encryption process which provides data sparseness and nonlinear transformation to enhance security. An authorized user with access to the polarization keys and the optical design variables can retrieve and validate the photon-counting plain-text. Optical experimental results demonstrate the feasibility of the encryption method.