Cybersecurity in Digital Payments

According to JP Morgan, 30% of companies have reported an increase in digital payment frauds. 

With the internet, businesses have revolutionized the way they collect customer payments. But not far behind are hackers/ miscreants who have made the internet an unsafe place, with increasing fraud and security breaches. 

In this post, we look into why cybersecurity is important for businesses setting up online payments and the best practices we recommend following. 

Why is cybersecurity important for online payments? 

Whether you’re a business or a consumer, keeping your data secure is crucial. But here’s why cybersecurity measures in online payments are even more important: 

1. To protect sensitive information

A typical financial services employee has access to 11 million files. Unfortunately, online transactions are susceptible to hackers. They are highly motivated by money to acquire data, especially personal banking information. Vulnerable systems are at high risk, which can lead to disastrous consequences for businesses and individuals. To protect sensitive data, cybersecurity in digital payments become crucial. 

2. To prevent fraud 

Money laundering, identity theft, and fraud are common concerns in online transactions. With machine learning and fraud detection mechanisms, cybersecurity programs can analyse transaction patterns for suspicious activity. This helps prevent theft/fraud in real-time.

3. To prevent hefty fines and legal repercussions

With online transactions, customers trust businesses to keep their data (card/bank details) safe. All merchants need to comply with payment industry requirements, such as PCI DSS, to ensure customer protection. If your business operates in the European Union, you have to comply with PSD2 Strong Customer Authentication (SCA). Multi-factor authentication helps reduce theft or fraud. As a business, if you fail to comply with these legal requirements, it could put you at risk of:

• Compensating victims for damages, if necessary 

• Expenses related to litigation
• Hefty fines by governing authorities 

4. Reduce chargebacks 

Most chargebacks occur when a cardholder disputes a charge/ transaction on their account. They may not recognize the charge and believe it to be fraudulent, hence demand a refund from their bank. This is especially common in online transactions. 

Secure payment gateways can help reduce fraudulent chargebacks by verifying the identity of the cardholder, saving you from financial losses and chargeback fees. 

5. Positioning as a global business

There is the lack of uniformity in cross-border regulations. Different countries have different legal frameworks and security standards or regulations; that need to be catered to. By implementing secure payment gateways, compliant with multiple countries, businesses can have a worldwide target audience.

6. Protect your reputation

When Uber was hit by a data breach in 2016, the customer perception dropped by 141%. Data breaches lead to customer distrust and negative publicity. Brand reputation reigns supreme for all business. Enterprise organizations sometimes spend millions of dollars to build their brand image. If one single data breach could put all that effort down the drain, you begin to see the importance of cybersecurity for all payment infrastructure. 

What are the best practices for securing online transactions?

Here are some of the best practices we recommend to brands setting up cashless payment modes: 

1. Understand your PCI compliance requirements

In 2004, four major credit-card providers — American Express, Visa, MasterCard, and Discover, created The PCI Security Standards Council. Today, the PCI-DSS standard is a set of policies that govern how sensitive cardholder information should be handled

In the simplest of terms, no business must be able to see or access the customers’ card data. For this certain things need to be in place including: 

• Data encryption during transmission
• Restrictions on access to information 
• Robust firewalls and updated software and spyware. 
• Prevent default credentials and allow customers to change credentials easily. 

2. Data encryption with SSL and TLS protocols

Any online transaction requires the customer to share credit/debit card numbers, expiration dates, and CVV. Without proper data encryption, this data could easily be hacked. 

Data encryption protocols including TLS (Transport Layer Security) and SSL (Secure Sockets Layer) can be used to encrypt data. TLS is a cryptographic security protocol that emerged from SSL, but can be considered as an upgrade for data privacy, security and authentication. 

All SSL-certified websites have “https://” or a padlock icon which denotes a secure e-payment system. With the TLS encryption in place, the sensitive information is only transferred to the intended recipient. By authenticating the server, it prevents attackers from getting access to the data. 

3. Implement 3D Secure 2

3D Secure 2 (3DS2) is used to authenticate online transactions by verifying a customer’s identity. It serves as an additional layer of authentication to make sure that a legitimate cardholder is conducting a transaction.

Here, the cardholder needs a one-time password, or fingerprint or facial recognition. This helps to prevent fraud and unauthorized transactions.

While it creates extra steps during the checkout process, for the first time — subsequent transactions at the same merchant do not require extra authentication (if approved by the card holder) 

Additionally, 3DS2 prevents false declines by providing detailed data about the transaction. This helps both businesses and customers, preventing costly mistakes.

4. Deploy multi- or two-factor authentication

Multi-factor authentication (MFA) and two-factor authentication (2FA) are customer-facing authentication processes to verify the identity of users before processing payments. This is divided into two levels of authentication: 

1. What the user knows - Net banking or card details 
2. What the user has - OTP, PIN or CVV. 

Multi Factor Authentication requires three or more different authentication factors in order to authorize a payment. Apart from the two, the third authentication step could be something they are (biometric data). For example in a password, a one-time code generated by an app and a fingerprint scan. 

The more factors used makes it much harder for any miscreant to access an account, even with access to the user's password.

5. Ask for Card Verification Value (CVV) 

Card Verification Value (CVV) is a three/four digit code on the back of credit cards. It helps verify the identity of a card holder during online transactions. 

In a data breach, the CVV is unlikely to be stolen since it is not embossed or stored on the magnetic stripe or chip of the card. 

6. Incorporate payment tokenization

Tokenization replaces the 16-digit card number with a digital identifier known as a ‘token’. It helps to protect the original data, while letting payment gateways initiate secure payment.

Payment tokenization helps in: 

• Protecting sensitive payment information from being intercepted or stolen during a data breach. 
• Helps businesses comply with regulations and legal standards, like PCI DSS and the General Data Protection Regulation (GDPR). 
• Customers don’t need to repeatedly enter payment information for recurring payments or subscriptions, which improves the customer experience and lowers abandonment rates. 

7. Maintain security of the website 

To ensure customer safety, businesses need to keep the website, content management system (CMS), and online payments secure. Here’s how: 

• Regularly update your website, CMS software and plugins or extensions, to patch security vulnerabilities
• Only accept strong passwords from the customers with certain pre qualifications like capital letters, special characters, numbers etc. 
• Use a firewall to prevent unauthorized access and to block any suspicious traffic. Deploy monitoring and fraud detection tools to detect and respond to suspicious activity on your website. 

8. Train your employees

Take appropriate steps to train employees about potential threats and steps for action. Set up sessions on data protection guidelines, multiple security measures and protocols, phishing and more. Make sure your employees understand the importance of online payment security through audits; and encourage immediate reporting of any suspicious activities.

9. Inform your customers

Make an effort to promote the data protection procedures to your customers. It is not only about providing features, but ensuring that your customers know and implement on their end; to truly make the whole process secure. 

Conclusion 

Cybersecurity is a growing concern for all businesses. Hence it is important to choose an end-to-end payment solution built with features and compliances built for high security.

PayBy digital payment solutions come with robust fraud detection and prevention mechanisms integrated into the systems. The solutions leverage AI-based fraud monitoring, 3D secure authentication and transaction risk analysis to ensure your approval rates are not impacted by cyber threats. 

Want to know more? Book a demo of PayBy today.