Everything You Need to Know About Payment Security

It should go without saying that payment security should be at the top of the priority of any business. Not only does paying close attention to it save you money and build confidence in you from your customers, but the ramifications for failing to do so can be extremely severe indeed, from lost revenue and reputation to the possibility of falling foul of regulators. 

Understanding Payment Security - What is it?

The importance of payment security has increased enormously in the digital age. Being able to take payments using online technology is convenient for both you and your customers, but with this has come to an increase in the amount of risk that comes with it. Unauthorised access, data breaches, and fraud can all cost you a lot of money and damage your business, but by adopting appropriate security measures you can minimise your exposure to this risk. 

Types of Payment Security

There are different types of payment security measures and technology that businesses can use to mitigate these risks, whether you do your business online or whether you’re a more traditional ‘bricks and mortar’ type of business. 

Encryption

Encryption protects sensitive customer data and financial transactions from unauthorised access, tampering, and theft. Businesses widely employ encryption protocols such as Secure Sockets Layer (SSL) and Transport Layer Security (TLS) to secure data transmission between customer browsers and business websites or payment platforms, using combinations of different encryption to establish a secure connection and safeguard data during transmission. Businesses should use strong encryption algorithms, up-to-date protocols, and proper key-management practices, including regular key rotation and secure storage.

Tokenisation

Tokenisation protects sensitive payment information by replacing it with unique tokens that have no intrinsic value if compromised. This deters bad actors from stealing payment information by converting it to a form that, if stolen, is of no use to them. This significantly reduces the risk of unauthorised access and data breaches and maintains compliance with industry standards and regulations.

Payment tokenisation replaces sensitive data, such as credit card numbers, with unique tokens generated by a secure system. These tokens are used to reference the original payment information, which is stored in a centralised token vault. The tokens themselves cannot be used to carry out fraudulent transactions or reverse-engineered to reveal the original payment data.

Authentication

Authentication is a security measure which verifies the identity of users attempting to carry out a transaction. There are several types of authentication: 

Single-Factor Authentication (also known as 2FA)

One form of identification, ordinarily a password or a PIN. 

Two-Factor Authentication (also known as 2FA)

Two forms of identification, such as a password and a one-time code sent to a registered device. 

Multi-Factor Authentication (also known as MFA)

Three or more forms of identification which may include biometric data, security questions, or physical tokens.

2FA or MFA greatly improve payment security by adding an extra layer of protection against unauthorised transactions. Some of the standard authentication methods used in payment processing include: 

Card Verification Values (also known as CVV)

A numerical code printed on credit and debit cards, which customers must provide during online or phone transactions to prove they have physical possession of the card. 

One-Time Passwords (also known as OTP)

A unique, time-sensitive code is sent to the customer’s registered device that the customer must enter to complete a transaction. 

Biometric Authentication

The use of unique physical characteristics, including facial recognition, fingerprints, or iris scanning, to verify the customer’s identity. 

Fraud Prevention and Detection

Fraud prevention and fraud detection may have similar names, but they have different meanings. Fraud prevention is about halting fraud before it happens, while fraud detection is about identifying fraud as it happens. So, prevention is proactive and involves taking steps to avoid fraud, whereas detection looks for patterns in the data that indicate fraud.

Payment Card Industry Data Security Standard Compliance (PCI DSS)

The PCI DSS (Payment Card Industry Data Security Standard) is an information security standard designed to reduce payment card fraud by increasing security controls around cardholder data. The Standard is a result of a collaboration between the major payment brands and is administered by the PCI SSC (Payment Card Industry Security Standards Council).

Secure Payment Gateways

Secure payment gateways are the technology used by merchants to authenticate and securely transfer payment data between the various parties involved in the transaction process. Once the payment is approved or declined by the parties involved, the payment gateway sends back the relevant message to the merchant. 

Essentially, they act as the central cog in the payment processing system, whether the purchase is being made online or in-store. Within any given transaction, they’re the front-end mechanisms which collect, transfer and authorise customer information in real-time to a merchant’s bank, where the transaction itself is then processed. Secure payment gateways should be PCI DSS compliant, featuring encryption, tokenisation and fraud detection as standard.

Firewalls and Network Security

A firewall is essential software or firmware in network security that is used to prevent unauthorised access to a network. It is used to inspect incoming and outgoing traffic with the help of a set of rules to identify and block threats by implementing it in software or hardware form.

Address Verification Service (AVS)

The Address Verification Service is a tool that enables merchants to detect suspicious activity. AVS verifies that the billing address entered by the customer is the same as the one associated with the cardholder's account. AVS response codes are returned to the merchant during the authorisation process. 

Security Updates and Patches

Software vendors, hardware manufacturers and operating system providers release regular security updates and patches to address known vulnerabilities, bugs, or other security issues in their products. 

Regular security updates and patches are critical components of maintaining a secure environment for businesses. They help to protect payment infrastructure, customer data, and other critical systems from vulnerabilities, cyberattacks, and other forms of unauthorised access.

How to Ensure Regular Security Updates and Patches

There are steps that you can take to ensure that your systems are always kept up to date. You should start by developing a patch-management policy which crystallises your approach to patch management, including responsibilities, priorities, timelines, and procedures for applying updates and patches.

You should always monitor for updates, and ensure that they are applied as soon as you become aware of them. It’s also important to test your systems after updates have been installed in order to ensure that they’re working properly. After all of this is done, make sure that you’re regularly reviewing your processes to ensure that they’re compliant with the latest PCI DSS standards. 

Which Businesses Should Worry About Payment Security?

All businesses that process, store, or transmit payment information, including credit card data, should be concerned about payment security. The penalties for failing to do so could include losing the trust of your customers and your business’s reputation. But there are some businesses that should make it their first priority: 

Online retailers

Any service providers that accept payments via their websites or mobile applications need to implement secure payment gateways, encryption, and other security measures to safeguard customer data during transactions. 

Traditional brick & mortar stores

Retail shops that process payments using point-of-sale (POS) systems, including card-present transactions, must ensure the security of their payment terminals, network infrastructure, and stored customer data.

Hospitality

Hotels, restaurants and other hospitality businesses that handle payments from guests can be particularly vulnerable to bad actors and must implement strong payment security measures such as secure POS systems, tokenisation, and access controls to protect customer data.

Recurring payments

Businesses that offer services such as utilities, telecommunications, or subscriptions and that process recurring payments from customers, need to ensure the security of their payment processes and stored customer data.

Non-profit organisations

Charities and other non-profit organisations that accept donations or process payments for events, memberships, or merchandise must implement secure payment methods to protect sensitive donor and member information.

B2B businesses

If you process payments from other businesses, such as suppliers, vendors, or partners, must prioritise payment security to maintain trust and protect sensitive financial data.

How Businesses Can Create a Payment Security Strategy

Creating a strategy for payment security may sound like an especially daunting challenge, but it’s essential if you want your business to run as smoothly as possible. Payment security is to an extent a state of mind. If your business takes this security seriously, customers and suppliers will start to take note, and trust in it will increase. These are some steps that you can take to develop a comprehensive payment security strategy.

1. Assess your current arrangements

You should start by looking at your current payment infrastructure, processes, and systems to identify potential vulnerabilities and areas for improvement by carrying out a risk assessment. Determine the types of sensitive data that your business handles and where it is stored, processed, and transmitted.

2. Understand your compliance obligations

Familiarise yourself with the regulations that govern your industry, such as PCI DSS. By establishing your specific business compliance requirements, you can focus on those rather than getting side-tracked by requirements that may not even be relevant to you.

3. Develop security policies and procedures

Now that you know what your business’s needs and potential weaknesses might be, you should establish clear policies and procedures that address payment security, including guidelines for handling sensitive data, access controls, how you’ll respond to any issues and employee training. These policies and procedures should, of course, be in line with industry standards and regulations.

4. Put security measures in place

Implement appropriate security measures, such as encryption, tokenisation, strong authentication, and firewall and network security. Choose secure payment gateways and work with PCI DSS-compliant vendors to streamline compliance efforts.

5. Monitor systems and test them

Regularly monitor your payment systems, networks, and applications for potential threats or vulnerabilities. Tactics such as vulnerability scans, penetration tests and system audits will test the effectiveness of your security measures, as well as identify areas for further improvement.

6. Adjust your approach as necessary

Payment security is a process of ongoing improvement rather than something you need to attend to once and once only. By continuously evaluating the effectiveness of your payment security strategy and making necessary adjustments to address changes in your business, industry regulations, or the threat landscape, you can ensure that your strategy remains relevant and effective in protecting your customers’ data.

7. Develop an incident response plan

Even in cases in which you think you’ve done everything you can to secure your data, things can go wrong. A thorough incident response plan will guide your business in the event of a security breach or other incident. This plan should outline roles and responsibilities, communication protocols, and procedures for containing and mitigating the incident. 

When customers make payments to you electronically, they are entrusting you with some of their most confidential information. Taking payment security seriously will protect the reputation of your business, minimise the amount of money you lose to fraudulent transactions and keep you on the right side of the regulators. Being able to trade online has opened up new marketplaces to many businesses; get your payment security right and you’ll be in a prime position to fully take advantage of it.