With the advancement of technology, digitisation has taken a central spot in the payment landscape. Digital payments are omnipresent in today’s interconnected world and have made transactions faster and simpler. This paradigm shift has revolutionised e-commerce and trade. The immense growth of digital payments in India can be attributed to internet penetration, an increase in smartphone users, rapid adoption of online payment, and innovative solutions like UPI, net banking, mobile wallet, bank pre-paid cards and the Government’s constant push to transform India into a cashless economy.
However, with the progressive momentum of digital payments, cyber threats have increased extensively to a whopping $1.55 billion in the previous year. This data on threats demand attention from stakeholders involved in the payment landscape to come forward and work together to curb the growth of fraud in the sector. Although a level of cybersecurity is maintained to secure the payments made online, fraudsters now use advanced modus operandi and have started leveraging screen-sharing apps and QR codes along with phishing and smishing. Hence, the stakeholders in the payments sector must give utmost importance to adopting fraud and risk mitigation measures to minimise the threat attacks on their businesses.
Here are 5 steps for effective fraud and risk management in the payments industry:
1. Add Payment Protection with 3D Secure
By using 3D Secure, merchants can add more protection to the payment process. 3D secure enables an additional layer of protection to an online transaction, ensuring 2-step authentication on every online purchase. The cardholder is asked to provide identity proof by inserting a unique password, OTP or SMS code to complete an online transaction.
2. Introduction to Fraud Monitoring and Adaptive Authentication
With the help of artificial intelligence (AI) based systems, stakeholders in the payments sector can introduce anti-fraud mechanisms that can verify every transaction in real-time. And with adaptive authentication, different levels of authentication can be set up depending on the risk associated with the transaction. Factors like users’ account, location, device details and behavioural tendencies are used to assess the context of a login or transaction to help differentiate legitimate customers and malicious users.
3. Remain in Tandem with PCI DSS
For safe transactions, it is essential to remain in tandem with Payment Card Industry Data Security Standard (PCI DSS). Staying in compliance with PCI DSS ensures the optimisation of the security of credit, debit and cash card transactions and the protection of cardholders against misuse of their personal information.
4. Prepare Stakeholders to Detect Threats
With the growth of digitisation, it has become imperative for banks and other financial service providers to adopt unique steps to ensure that the stakeholders involved in the payment landscape are offered adequate training to detect threats and attackers. People involved in online transactions must acknowledge the attempts made by frauds through emails and calls and avoid sharing sensitive information with imposters.
5. Work with only trustworthy partners
Most businesses rely on third-party partners for digital transactions making the role of digital payment partners extremely important. Thus, while choosing a third party, there are several factors that businesses should consider while planning a secured transaction. The partner must have a PCI-compliant infrastructure and use 3D Secure.
Summing up Stakeholders involved in the payment infrastructure must understand and work towards the potential threats in the payments industry. Challenges like data theft and payment fraud can only be dealt with a reliable plan. The steps discussed in the article can help in overcoming the external threats in the payments sector and maximising its impact.