Key Takeaways
√ As payment processing systems advance within the web marketplace, threats to customer protection increase.
√ One single security lapse could result in significant financial loss,
brand damage, or lost trust from clients.
√ Robust payment processing security measures and collaboration with reliable service providers allow businesses to secure customer data from emerging cyber risks.
√ Segpay offers industry-leading payment solutions engineered with advanced security protocols, cutting-edge fraud protection, and robust compliance features.
- 7 minute read
Payment processing is king for online businesses today. Indeed, customer safety is at stake, as the recent Equifax data breach demonstrates. As payment systems advance with the web marketplace, threats to customer protection grow. Here, we will discuss trends in payment methods, common threats to secure online payment processing, why businesses lack sufficient security measures, and what you need to do to safeguard your business and customers.
Importance of Payment Processing Security
Any web-based company should not play with its payment processing security. Correspondingly, Internet transactions have also increased, and frauds and data breaches have risen accordingly. One single security lapse could result in significant financial loss, brand damage, or lost trust from clients.
Cybercriminals’ approaches to exploiting weak points in payment systems change as technology changes. Therefore, businesses must remain vigilant about their security strategies.
Growing Trends in Payment Methods Used by Online Businesses.
Digital Wallets
Digital wallets like Apple Pay, Pay, Samsung Pay, Cash App, and Google Wallet have become more prevalent in recent years. Statista reports project the market for digital wallets to reach $15.17 trillion by 2027, growing at a CAGR of 11.88%.
Mobile Payments
Due to smartphone use, mobile payments have grown significantly. According to Statista survey results, four out of every ten American mobile phone owners made payments by mobile devices within 2021, an increase of 14.2% compared with 2019 figures.
Global Acceptance of Credit Card Payment
Credit cards continue to take over as the most globally accepted online means for making payments. Per Statista, the market share for credit card payments was twenty percent (20%) in 2021. However, the market share is expected to decline going forward.
Common Threats to Payment Processing
1.Phishing Attacks
Hackers use phishing attacks as their standard tool for tricking people into revealing confidential information like passwords or credit card numbers. They typically send fake emails or create bogus websites that look legitimate, forcing the victims to give out their personal data.
For instance, in 2020, Twitter encountered a highly publicized phishing attack that compromised accounts associated with several high-profile persons like Bill Gates and Elon Musk. The attackers then hijacked the accounts using social engineering methods that helped them access Twitter’s internal tools. Afterward, they pushed to promote a cryptocurrency scam through the accounts, revealing how advanced and significant phishing attacks can be.
2. Malware and Ransomware
Cyber threats such as malware and ransomware can enter payment systems to steal or lock information until paid for. Malicious software programs can be injected into a system in multiple ways, including phishing emails, infected websites, or compromised software updates. These programs clandestinely collect sensitive details as malware silently nestles into your system.
3. Insider Threats
Untrustworthy parties within a business can significantly risk payment security. Such insider threats may include an employee losing customer details or helping to accomplish a deceitful deal. Discovering and averting these threats is problematic because these offenders usually have authorized access to critical information and systems.
4. Data Breaches (DDOS attacks)
Distributed Denial of Service (DDoS) attacks on payment systems can cause them to stop working and lead to someone gaining unauthorized access to classified information through their crash. By flooding the targeted system with traffic from multiple sources that would exhaust its resources, making it unavailable to legitimate users.
5. IoT Vulnerabilities
This has given cybercriminals new vulnerabilities to exploit through Internet of Things (IoT) devices in processing payments. The majority need to be more secure, and due to their limited functionality, they can be manipulated by anyone who wants to.
A recent survey indicated that IoT attacks escalated to 112 million in 2022 from 32 million in 2018, pointing out the increased danger posed by this type of attack. For hackers to access online payment systems without authorization, they exploit weaknesses within IoT devices.
6. Lack of mobile regulation in some industries
As mobile payments take off, some sectors have been slower than others to introduce regulations, exposing their customers to fraud and data theft. Increased adoption of mobile payment solutions leads to higher chances of security breaches and unauthorized transaction attempts.
For instance, mobile payment providers may not have to comply with stringent security standards necessitated by conventional financial institutions because countries have less established regulatory frameworks. This makes it easier for hackers to exploit these gaps by breaching these infrastructures.
The Risks of Inadequate Payment Processing Security
Failure to invest sufficiently into the secure processing of payments exposes a business to several risks, such as compromised finances, reputation, or client trust. Once an organization experiences a security breach, long-term repercussions usually follow suit. Here are various aspects at stake due to poor payment processing security:
1. Sensitive consumer data, especially payment information, can be at risk:
Inadequate payment security exposes customers to unsecured personal and financial information risks. In case a data breach occurs, hackers can get into this sensitive customer data, thus having names, addresses, credit card numbers, or bank accounts, among others. This information can be used for fraudulent transactions or selling identities on the dark web.
For those affected customers, it ranges from financial losses to poor credit ratings, apart from the pain they go through. According to IBM, these breaches cost an average of $4.45 million in 2023, a 15% increase from 2020, indicating how contentious this issue has become.
2. Having to chargeback for any disputed transactions:
When a client disputes a transaction due to fraudulent activities or unauthorized use of their payment information, businesses may have to absorb the chargeback fees and incur costs related to the transaction’s value. Besides immediate financial loss, chargebacks involve extensive investigations into the dispute resolution process, which also requires time and resources.
3. Failing to meet industry standards:
Companies that fail to respect the PCI DSS, a benchmark for payment security, may face fines and penalties imposed by regulatory bodies. The PCI DSS comprises security requirements for any organization around the globe processing, storing, or transmitting cardholder data.
Non-compliance with these regulations leads to penalties amounting to $100,000 plus additional expenses for forensics examination, legal fees, and settlements. Non-compliance also means the end of an entity’s ability to accept cards, thus cutting off a significant income source.
A research study by Verizon indicated that only 27.9% of all organizations met PCI DSS requirements entirely in 2019. This shows why companies should rank compliance ahead of everything else.
4. Your customers are at an increased risk of fraud and identity theft:
Poor payment security mechanisms can expose your customers to fraud and identity thefts, compromising their trust in you as a brand or damaging your reputation. When clients entrust their personal and financial data with any organization, they assume the information will be secure enough.
If customer data is compromised in a security breach, confidence in the business’s ability to protect its information may be lost. As a result, customers may lose faith in the business, leading to attrition, negative press, and a damaged brand name.
Inadequate payment processing security can also lead to indirect costs such as increased insurance premiums, loss of business alliances, and difficulty acquiring new clientele. Reputational damage caused by a security breach can have long-term implications for businesses’ ability to compete within their marketplace while maintaining a solid customer base.
Risk Mitigation
To minimize these threats, businesses should take a pre-emptive approach to payment security by focusing on strong mobile payment security controls like tokenization and encryption while conducting regular audits and training employees. Hence, robust payment processing security measures and collaboration with reliable service providers allow businesses to secure customer data, meet industry guidelines, and protect their financial health and reputation from emerging cyber risks.
Strategies for Protecting Payments Systems
- Two-Factor Authentication: This approach adds an extra authentication layer to payment processing. Users must provide a second identification, such as a one-time code sent through their mobiles.
- A good quality TLS/SSL system: Using a strong Transport Layer Security (TLS) or Secure Socket Layer (SSL) system ensures that any information passed between the customer’s browser and the payment processor is encrypted, hence making it difficult for unauthorized people access this sensitive data.
- Pay Attention To Changes In PCI DSS: PCI DSS are global security standards that all organizations handling cardholder payments must observe. Keeping abreast with changes in these regulations will guarantee safety and compliance in your payment processing infrastructure.
- Have A Strong Firewall for Your Business: A resilient firewall prevents unauthorized entry into your payment system by repelling any threats before they can cause harm.
- Keep track of updates, patches, and modifications made to your company’s digital systems. Regularly update your payment processing software and systems, enabling you to address any known vulnerabilities and protect current security measures against breaches.
- Verify transactions as they come in: Implementing real-time transaction monitoring can identify fraud early enough, enabling you to take the necessary actions to prevent it from happening again and safeguard your business and its customers.
- Have restrictive or zero log policies for certain transaction information: Reducing sensitive data stored within logs of your payment processing can lower eventual risk after a possible breach occurs.
- All Employees Should Know the Security Standards: Educating your employees about best practices for securing payments ensures that human errors do not cause insider issues.
- Require CVV Verification on Credit Cards: By demanding that customers produce Card Verification Value (CVV) numbers when making transactions, it becomes harder for unauthorized persons to use the card as this information is not carried on the card and can only be obtained from it.
- Have risk management tools against fraud: Deploying fraud detection and prevention tools like machine learning algorithms and behavioral analytics will stop suspicious activities before they get processed.
Implementation of Continuous Improvement
Promoting a Security-Centric Culture
It is essential to nurture a culture of security awareness in your organization that supports strong payment processing security. Regularly training employees and promoting good security practices can align everyone toward protecting customer data.
Allocate Resources Appropriately
Investing in the right personnel and security tools is crucial if an organization wants to keep up with emerging threats. You can effectively apportion resources to maintain a firm defense against possible attacks by constantly evaluating security necessities.
Partner with Trusted Vendors and Service Providers
Secure payment processing is vital in today’s world of technology. The number of online transactions significantly increases the risks associated with cybercrime. Knowing these common risks and implementing strict safety measures will help companies keep their clients’ secret information intact, maintaining loyalty to their brand.
However, with the rapid evolution of new threats at alarming rates, organizations must be proactive regarding payments. This will involve developing a culture of security and proper resource allocation, as well as working with trustworthy payment service providers such as Segpay to develop secure payment systems amidst changes in context.
It would be unwise to wait until it is too late to prioritize payment security. Don’t risk your business’s reputation and customer trust—act now to protect your payment infrastructure. Segpay offers industry-leading payment solutions engineered with advanced security protocols, cutting-edge fraud protection, and robust compliance features. By partnering with Segpay, you’ll safeguard your customers’ sensitive data and financial transactions while promoting secure, frictionless checkout experiences that drive conversions.
Want to know how to protect your business in payment processing?
Protect your business, customers, and revenue streams today. Contact Segpay to discuss implementing a bulletproof payment solution tailored to your specific needs. With Segpay as your payment partner, you’ll fortify your defense against cyber threats while streamlining global payment processing. The time to prioritize payment security is now – take the first step by requesting a Segpay consultation. Reach out to us with your questions at [email protected]
