Telling the Signs of an Insecure Payment
Online payments have revolutionized the way we shop, pay bills and transfer money. They give us immense convenience, but with a number of security risks as well. With so many people accessing their finances digitally, it’s increasingly important to make sure our payments are secure.
When it comes to finding a reliable payment processor, many companies end up settling for less than they deserve and staying in business relationships that just aren’t right for them. Making payments more secure requires careful planning and caution when dealing with online transactions. In this article, we will discuss some simple ways to make transactions more secure and what to look for in the perfect payment processor.
5 Simple Ways to Reduce Risk and Identify Red Flags
The simple fact is, if your payments provider isn’t focused on and prioritizing secure payments and fraud prevention, you should find a provider that is. Fraudulent transactions aren’t a problem until they are, and you can save your team a lot of headache and heartbreak by identifying the signs of risk before they’ve affected your customers.
How can you tell if cybersecurity is a priority to them or an afterthought? As is key to any great relationship, your payment provider should use clear communication and share these focuses and features with you. Focus on finding specific tools and processes that are in place to prevent financial fraud. If a company can’t tell you the steps they are taking to mitigate fraud risk that’s a red flag. Every software or solution has its own methods, but here are a few key types of fraud prevention that you should look for.
Two-step Verification
Quickly becoming the gold standard for most online accounts, ensuring that all users can set up a two-step verification when logging in allows an additional barrier of safety to prevent unauthorized access. Although most people know the importance of using long, and complex passwords to prevent hackers from simply guessing and gaining access to private accounts, we are all guilty of reaching for that one we can actually remember. It is in instances like this that two-step verification goes from being a nice addition to truly vital. From a user perspective, this may be a tedious addition to the login process by having to confirm a code sent to their email address or sent through text link, but it can help reduce the risk of account hacking.
Name Verification
Focusing on payment-specific features, one of the most critical times for creating a secure payment network starts with the onboarding process. Especially when dealing with digital and contactless payment methods, it can be harder to identify when a person and their card details just don’t add up. By partnering with providers that can support adding a name verification step to your onboarding process, you can weed out fraudulent accounts and users before fraud occurs. When onboarding a new customer, if the name being used to set up the account doesn’t match the name on the user’s card or banking details this should be flagged as suspicious, rejected, and investigated to stop fraud attempts before they happen.
Penny Testing
Another way to prevent fraud and stop chargebacks before they happen is by verifying that users have funds in their account at the time they connect their card. By having users authorize a micro transaction to validate the bank account and its funds, you can ensure all financial data input into the system is accurate, prevent transaction failure and fraud attempts in the future. Using the right payment processor, this entire process can be completed in seconds.
3D Secure & Liability Shift
For credit cards and debit card transactions, 3D secure is an additional layer of authentication that refers to the “three domains”, which are involved in the processing of a transaction: the acquirer/merchant domain, the issuer’s domain, and the interoperability domain. Put simply, the card issuer will authenticate that the one attempting to process the transaction is in fact the cardholder by requiring them to enter a password associated with the card or enter a code sent to their phone to prevent fraudulent transactions. This creates a liability shift from the merchant to the card issuer in the case of any fraudulent chargebacks. Although 3D Secure and Liability Shift tends to come at an additional cost, it is an added layer of security that can be very beneficial for businesses that process large or frequent transactions.
Third-party Compliance Certification
If relying on personal judgment has scorned you before when selecting a trustworthy payments provider, go the safe route and put your trust in someone with better judgment, a third-party assessor that is. At the end of the day, the ins and outs of encryption and data protection are complex and should never be left up to chance. Although it would be nice if we were all cybersecurity experts, sometimes it is easier and more convenient to let someone else look into the messy details of a company’s security practices. The two main certifications you should look out for are:
- PCI DSS: the most widely sought-after compliance certification for companies in payments, it ensures the secure handling of CHD (Cardholder Data) and the CDE (Cardholder Data Environment). There are different levels to this certification, but as a rule of thumb, the smaller the number the better the certification with a Level 1 service provider being the highest a company can achieve. The most critical thing to remember here is that all businesses that store, process or transmit payment cardholder data must be PCI DSS Compliant.
- SOC 2 Type II Compliance: For bonus marks, SOC II Compliance deals with a company’s internal controls relating to information security. With human error being one of the biggest contributing factors in security breaches, it is important that the companies handling your sensitive information have the proper internal controls in place.
