The rapid growth of contactless payments has been the biggest highlight of the isolation economy that the world is fast settling into. Increasing convenience of mobile payments, however, comes with opportunities for cyber pickpockets. From stealing card details to PINs and passwords, cyber criminals are using sophisticated ways to siphon off money from unsuspecting customers.
Technology has been at the forefront of bolstering security around digital payments. From assessing behaviour patterns, to creating a layered defence and preventing unauthorised access of information -- latest technologies are helping avert online frauds. The rising concern around digital frauds has got both banks and fintechs to prioritise security around online payments.
Broadly, there are three types of risks unique to digital payments.
Here are some advanced tech measures banks and fintechs can implement to further strengthen security around transactions.
Insights into customer behaviour online have helped fintechs build customised and secure solutions for their users. From facial recognition to voice-enabled payments, fintech companies are leaning towards the sophistication of using artificial intelligence and machine learning to reshape the digital payments & banking space.
Behavioural insights can give fintechs more information on how users interact with online applications and devices. Using technologies like predictive analytics, fintechs can detect fraudulent transactions in real-time and block them. Fintechs are also building advanced security solutions like risk-based authentication, biometric authentication, etc. to further aid fraud prevention.
A payment life cycle, typically, starts when a user initiates a payment which the merchant routes through a bank, where the payment is processed. Fraudulent transactions usually involve compromised payment information and are not initiated by the customer. By being able to control transactions, fintechs can identify & isolate unusual activity and stop it before it occurs.
Interceptors allow fintechs to verify transactions by intervening payment requests going out to a merchant. Using their risk assessment logic, fintechs can determine whether or not a payment request is authentic. Thus, being able to control payment authorisation and preventing fraudulent transactions from going through.
Integrated tech platforms today are designed to be compliant with regulatory requirements. They also follow the latest data security standards including ISO 27001, PCI DSS, and AICPA SOC 2. For instance, sensitive information from credit or debit cards need to be safeguarded by adhering to Payment Card Industry (PCI) standards. These guidelines are reviewed and updated every year, to keep up with the changing security trends.
Partnering with such API platforms can help banks and fintechs build highly secure and regulatory compliant products. Complying with these standards means that any payment information processed or transmitted during a transaction is stored securely.
Digital payments are here to stay. In the wake of the pandemic, they have only further catalysed India’s transition into becoming a cashless economy. Frauds and online payment scams are the unwanted byproducts of this transformation, which banks and fintechs need to minimise and eliminate completely.
Educating users on security basics is a definitely a step in that direction. Additionally, agile tech infrastructure that can adapt to evolving security trends will aid banks & fintechs in their mission to tackle growing frauds.