Everything You Should Know About Payment Security

Everything You Should Know About Payment Security

A Guide For Merchants

Everything You Have to Know About Payment Security

Technology development, a growing number of online transactions, and a fast-paced lifestyle create new opportunities for cybercriminals. As an online merchant, you need to provide the highest level of payment security to assure your customers that their data are safe.

Providing the highest level of security with complete encryption and various layers of fraud prevention tools should be a priority for your online business. While it can be difficult to manage all the security measures on your own, we highly recommend finding a reliable payment platform that combines both payment processing and effective anti-fraud protection.

How do you provide secure online payments?

As it is your responsibility to keep the purchasing process under control and reduce the risk of fraud at every step of checkout, you should provide solutions that reduce the vulnerable points of payment processing.

Read on to learn the most important things that will keep your payments secure.

SSL protocol

The first thing that is crucial for your payment security is ensuring that you have an SSL protocol implemented on your website. It helps you to encrypt information that goes through the site, such as credit card details and sensitive data that customers share during the checkout process.

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Plus, the padlock icon visible in the URL bar next to your web address that begins with https tells customers that your website is protected and safe to use. This grows your online reputation, improves brand awareness, and builds your credibility.

The SSL certificate comes with many benefits for your business, so make sure you have one in place.

PCI compliance

You’ve probably heard about PCI compliance if you accept payments on your website or consider working with one of the payment providers.

In short, PCI DSS is a set of regulations created by major payment card brands such as Visa, MasterCard, American Express, Discover, and JCB. This scheme requires organizations to comply with 12 general data security requirements that every merchant needs to follow.

PCI compliance is required by credit card companies to make online transactions secure and protect them against identity theft. Any merchant who wants to process, store, or transmit credit card data is required to be PCI compliant, according to the PCI Compliance Security Standard Council.

However, Verizon’s report shows that even though the PCI DSS was launched in 2004, just 36.7% of organizations were actively maintaining the compliance programs in 2018, which is a major concern.

Note that getting compliance on your own is not the easiest task and can take weeks. You need to submit the application and prepare for the long and expensive process. That’s why most merchants prefer to work with payment providers that cover all the PCI issues, so that they don’t need to bother.

Tokenization

Tokenization is a technology that makes it easier to improve payment security and provide a payment process without vulnerabilities. It helps to authenticate the customer during the purchase without affecting the security of a transaction.

The process uses tokens—random strings of characters that replace sensitive information, such as a 16-digit credit card number. Tokenization reduces the chances of data breach, because if a token is stolen, it will be useless to fraudsters.

As consumers demand more amazing digital experiences, the world of retail is in a transformative phase and recent data breaches have increasingly put the safety of the consumer on the Board agenda. This is further exacerbated by recent regulations such as the EU General Data Protection Regulation to the EU Payments Services Directive 2 (PSD 2). Indeed, PSD2, with a key focus on protecting consumers and opening up access to new providers in the payments ecosystem, will force us into better behaviours by increasing security and fraud prevention and notably by specifying stringent requirements in authentication and accountability for all players. And of course, we must not forget PCI DSS, where compliance requirements are now more risk-based than they have ever been (which is a good thing). This will require new approaches to ensure the integrity of the ecosystem (identity management, authentication technologies such as biometrics (even 3D Secure is getting a makeover!), adaptive fraud monitoring, threat intelligence, analytics, security, etc.), and I believe that fraud prevention and information security will converge more and more. I have been an advocate of this for many years, but don’t take my word for it: already, both Visa  and MasterCard  have made moves in that direction by combining fraud prevention and traditional threat intelligence…

Neira Jones, Advisory Board Member and Ambassador, Emerging Payments Association

3D Secure

3D Secure authentication is an additional security layer for card-not-present transactions. The name comes from ‘Three Domain Secure’, which is a messaging protocol that involves three domains, such as a bank, technology that processes the transaction, and the issuing bank.

The system usually requests tokens or biometrics to authenticate cardholder information, which can decrease the number of fraudulent attempts. Plus, the liability on every transaction that is successfully verified is shifted from a merchant to the issuing bank.

Address Verification Service

You can also use an Address Verification Service, also known as AVS—a security measure used to prevent fraudulent transactions on debit and credit cards. The tool verifies whether the billing address provided by the cardholder matches the one associated with the card.

The address is verified as part of the merchant’s request for authorization during a credit card transaction. The merchant receives a response code from the credit card processor and knows whether the transaction should be accepted or rejected.

Sometimes, there can be a mismatch of the address, for instance because of misspelling or outdated information.

Remember that AVS itself is not a guaranteed prevention method, so it should be combined with other anti-fraud tools mentioned in this section.

How do you prevent fraud?

The number of vulnerabilities merchants might face is constantly growing, so make sure that your system complies with the payment, security, and risk standards of the countries you operate in. Suspicious activities can damage your company’s reputation and could cost you much more than money.

According to the European Fraud Report—Payments Industry Challenges card not present fraud in Europe represents almost 80% of the total volume of fraudulent card transactions. The report also states that the total value of transactions reaches €1.8 billion annually.

Fraud is costly and affects your credibility with a customer’s trust. Its detection can be time-consuming and requires comprehensive knowledge. That’s because suspicious activities can be similar, but are rarely identical, so they are difficult to detect. So, bearing this in mind, consider implementing a fraud protection service or choose a payment gateway with advanced fraud management tools.

The more and the faster we connect, digitize, innovate and share information, the more risks are introduced as criminals also connect, digitize, innovate and share information… As we increasingly go mobile and digital it is frightening to note that businesses haven’t kept up pace with criminals. Indeed, as more than a third of global online transactions are now mobile, it is frightening to see that most companies do nothing to protect their mobile apps (or indeed their APIs).

Neira Jones, Advisory Board Member and Ambassador, Emerging Payments Association

Fraudulent activities are made for personal gain and frequently committed against consumers. These could be unauthorized transactions, false requests for a refund, etc. It’s a real threat to payment security, but there are warning signs you can look out for to limit the number of fraudulent activities.

The most common methods to fight fraud are data analysis, pattern recognition, anomaly detection, multi-layer security, and risk assessment. Read on to see what you can do to minimize the risk of being hacked.

1. Monitor your orders

Monitor orders before shipping them, especially international ones. Plus, pay special attention to late night and early morning orders.

You should also require a signature upon delivery to ensure that the order is delivered and in good hands.

2. Provide updated product or service descriptions

Incomplete or mismatched descriptions increase the chances that the customer will file a chargeback. So, make sure that items on your website come with accurate and detailed descriptions.

You should also check your billing descriptors—they need to match your business name to make consumers simply recognize transactions on their bank statements. If customers don’t recognize your business name, they will most likely dispute a charge.

3. Send confirmation emails

Send email messages right after your customers place an order on your website. Include all transaction details to keep customers informed about the status of their transactions.

4. Provide shipping details

Customers want to know shipping costs and deadlines before they click the Pay button. Provide them with tracking information to keep them updated about where their package is and immediately inform them about delays.

Sometimes, fast shipping can help. People are impatient and waiting too long for ordered items may cause a dispute of the transaction.

5. Make a clear refund policy

Make your refund policy visible for website users and make it simple and easy to understand. Offer a refund when a customer isn’t satisfied with an ordered product. Provide detailed information on how to return the item and how to request a refund. It can help you prevent chargebacks and avoid negative reviews.

Set clear return policies. Return management can be less expensive and comes with less hassle than having to deal with chargebacks.

6. Keep all information regarding past orders

It’s good to keep details of past fraudulent activities to quickly recognize patterns and spot transactions that are considered risky.

Also, keep detailed records of all transactions, so that it will be easier for you to gather evidence and valid proof when a chargeback occurs.

7. Analyze trends

As fraudsters are getting more and more sophisticated with their attacks, you should follow the latest trends. Doing so will help you understand how they can impact your business and be better prepared for mitigation strategies.

If you work with decent payment providers or fraud detection companies, you can rest assured that they strictly follow all the trends and regulations on the market. But even so be vigilant—it’s better to be safe than sorry.

8. React promptly

Deal with customer issues promptly, as when customers know the status of their inquiries, they are less likely to file a chargeback. If possible, run a customer service 7 days a week 24 hours a day. If that’s not possible, state the support hours on your website and inform about an approximate time frame for addressing customer inquiries.

What should you know about chargebacks?

A chargeback was originally designed as a form of customer protection and occurs when customers dispute a charge on their bill. The reasons for chargebacks can be various and one of them is fraud.

Chargebacks are always costly for merchants, and if the bank claims that a customer is right, the merchant will lose the sale and have to pay the chargeback fee. You can limit the number of chargebacks, but it’s impossible to eliminate them completely. One of the most important things is to update your website and regularly fix errors.

How do you minimize payment risk?

Payment risk is a risk of loss due to some payment events. Many companies, especially ones that handle a high volume of online payments, have been forced to run their payment risk management strategies to avoid harsh consequences. Keep in mind that every payment method involves risk, and it could be fraud or operational risk (when the financial loss is due to human or technical errors).

Consumer adoption will be key: those organisations able to contribute to the enhanced payment security with that have a thorough understanding of their consumers’ behaviours and preferences that are able to provide them with solutions that are not only usable but safe and secure, will be the winners.

Neira Jones, Advisory Board Member and Ambassador, Emerging Payments Association

It is important to monitor your payments to predict the possibility of payment risk. But a wrong decision can cost you a lot of money, so sometimes it is better to let a specialized company manage payment risk on your behalf. You can also ask your payment provider for help, as the success of online payments and payment security depends on the ability to control the risk.

Wrapping up

It takes a lot of effort and energy to keep payments secure, but you should always monitor and analyze all data to ensure that there aren’t any open gaps. Watch closely for any type of threat, attack, and suspicious activity, and react promptly if anything happens.

Plus, work with reliable companies that help to process payments and keep your customers’ data safe.