Technological advancements have created financial flexibility that lets you make online payments easily. Today, you can pay for products and services using digital platforms as businesses and service providers have integrated modern payment options into their offerings.
However, every payment method available has a level of risk you must be wary of, whether you’re an individual or a business owner. That’s why reputable payment providers employ a range of security features to safeguard payments and avoid security breaches. This article explains the technology used to secure online money transfers.
What is Online Payment Security?
Online payment security can be described as the processes and measures that safeguard online financial transactions. These security systems safeguard the processing of online payments, including the funds and personal information of the sender and receiver, to mitigate security risks like fraud, hacking, and data breaches.
At a time when big data breaches are common in the US financial space, online payment security is a non-negotiable part of digital transactions among individuals and businesses alike.
As an individual, you don’t want to lose your hard-earned money to malicious actors. Similarly, your company may be in serious legal trouble if your customers’ data or funds are compromised. That’s why a secure payment system is a crucial aspect of global payments, protecting everyone from security risks.
How do Secure Payment Systems Work?
Secure payment systems leverage a range of tech systems to protect companies and their clients from potential security breaches. Common options include:
Secure Encryption Technology
The first and most common security feature employed by secure payment channels is encryption. When you initiate a transaction online, your data is encrypted before sending it to the payment service provider. Only the approved provider has the necessary key to decrypt the transaction data and complete the transaction. This makes it difficult for hackers or transaction interceptors to hijack the transaction.
For example, when you pay a cable TV subscription with your credit or debit card, your payment provider encrypts the data and sends it to your bank for verification.
Only your bank has the required decryption key to convert the data to a readable format that can be processed. The encryption technology works in two ways:
● Symmetric Encryption
This involves storing the encryption and decryption data using the same key. The encryption system is more efficient because decryption is quicker. However, it is less secure.
● Asymmetric Encryption
This encryption format stores the encryption and decryption keys separately. The encryption key is usually a public key, while the decryption key is private. As a result, asymmetric encryption is more secure but relatively slower.
Multi-factor Authentication (MFA)
These days, payment systems often use multi-factor authentication technology as a security protocol. This requires anyone making payments to complete at least two types of verification for the transaction to be completed.
For instance, you may be required to enter your password, PIN and a code from authentication software like Google Authenticator to process a transaction. The use of multiple types of verification make transactions more secure than using a single password that hackers or fraudsters may guess.
KYC Checks
Another common security feature used by payment systems is identity verification. Most of these platforms have stringent Know Your Customer (KYC) checks in place to combat fraud and money laundering.
Usually, they use fraud prevention systems to spot unusual behavior or suspicious activities and block related transactions after flagging them. This works using sophisticated algorithms and machine learning to spot potentially fraudulent activities.
For instance, some payment providers, such as PayPal, do not accept users from certain countries due to high levels of fraud in their region.
Tokenization
More recently, companies have turned to tokenization to secure online payments. This works similarly to encryption technology. However, instead of scrambling the actual data, it replaces it with a token. The token’s original data is securely stored in a data vault with a unique sequence that hackers cannot decipher.
Popular Online Payment Methods and Their Security
Businesses use payment service providers now more than ever to facilitate fast payments with little to no room for security exploitation. We highlight the most popular and secure online payment methods below:
Credit/debit Cards
Credit and debit cards are the earliest and most used payment methods worldwide. They use various technologies and security protocols to safeguard users at both ends of the transaction. For instance, merchants that transmit and store users’ card details must comply with the PCI Security Standards Council (PCI DSS) regulations.
These regulations state that they must maintain secure systems, encrypt transmitted data, have solid access control systems and continually test their security systems against potential risks that fraudsters can explore.
Cardholders also have the option of using MFA for an additional layer of security. This includes a combination of identity verification tools, such as a biometrics login, security tokens, and one-time passwords (OTPs).
E-wallets
E-wallets are also commonly used by many modern businesses and individuals. These digital wallets let you store your card details on your mobile device, including smartphones. This way, you can make online payments directly from your device instead of carrying several cards around.
Users like e-wallets because they are more convenient and secure than card payments. They employ security features like multi-level access clearance and enhanced payment security. For instance, the average digital wallet is installed on a phone with a PIN, password, or biometrics login requirement. That’s a layer of security for you.
They also may require additional clearance using a OTP or email verification before confirming a transaction. The stored card details are protected using tokenization, so sensitive card details are not shared during transactions.
The introduction of products like FlexeWallet has been a game changer in the iGaming industry, with users preferring to have an e-wallet to back up their payments. newcasinos.com is an online iGaming resource with stringent rating guidelines that analyze which new platforms accept payment methods secured with an e-wallet, letting players add an additional layer of security to their gaming.
Bank Transfers
Online bank transfers also use similar security features, including MFA, to complete payments. Some also use machine learning and sophisticated algorithms to spot and flag questionable transactions.
Conclusion
Most merchants offer their customers secure online payment options when they make online payments. These available channels use various modern tech solutions to keep online money transfers secure.
We’ve highlighted the common security features in this article. Always endeavor to patronize businesses with verifiable security measures to safeguard your funds and data.
