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Secure payment is a safe way to process financial transactions, especially digital ones, and plays a key role in minimizing the risk of hacks and fraud. For a small business owner, it can be important to be aware of and implement strategies that will help ensure secure payment. Learn the details here.
Key Points
• Secure payment systems minimize the risk of fraud and unauthorized access to sensitive data during digital financial transactions.
• Effective payment security often combines end-to-end encryption, data tokenization, and multifactor authentication to protect information while in transit.
• Digital wallets and EMV chip cards are among the most secure methods for individuals to conduct safe transactions without carrying cash.
• Businesses can enhance payment security by using reputable payment gateways and ensuring their payment providers meet PCI DSS compliance standards.
• To prevent vulnerabilities, businesses should avoid storing full customer credit card numbers and CVV codes on local servers or databases.
What Is a Secure Payment?
Secure payment is a method of ensuring that financial transactions, such as sales processing, are conducted as safely as possible to avoid unauthorized access to sensitive data and fraud. You may also hear this called secure payment systems, or SPS, and it can be especially important to have this sort of infrastructure when managing digital transactions. Like securing a small business loan, adopting best practices in secure payments can be an important part of your business’s growth.
How Secure Payment Systems Work
Typically, secure payment systems work is a combination of end-to-end encryption, tokenization of data, and multifactor user authentication. Here is a closer look at the elements:
• Encryption translates payment data into an unreadable format to protect it while in transit.
• Tokenization substitutes a customer’s credit card numbers with random, one-of-a-kind identifier codes. (While related to encryption, tokenization is not the same thing. It replaces financial data vs. scrambling it.)
• MFA, or multifactor authentication, may require the user to enter a PIN, password, or other form of authentication to move the transaction ahead.
• Bank verification occurs, meaning the payee’s bank confirms that details are correct and funds are available for the purchase in order to approve the transaction.
• Fraud detection is enabled, which uses advanced programs to catch out-of-the-ordinary transactions. If a sale appears unusual (such as a purchase made in a foreign country), the transaction may be halted and checked.
• Compliance checks are also usually part of a secure transaction. This involves following guidelines to safely handle sensitive financial information.
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Most Secure Payment Methods
If you run a business, you likely want to ensure that you are using state-of-the-art secure payment methods to get funds into your small business checking account. These can include digital wallets and credit cards/EMV chip cards.
Digital Wallets
A digital wallet is an electronic method that enables individuals to store payment information digitally. This kind of wallet can securely hold credit card, debit card, and digital currency details until they are needed for a transaction. What makes digital wallets especially convenient for customers is that they don’t need to carry cash or physical cards. Instead, they can use a mobile device or other online services. You may be familiar with such digital wallets as Apple Pay, Google Wallet, PayPal, and Venmo.
Credit Cards and EMV Chip Cards
Most credit cards today (including small business credit cards) are EMV chip cards; the same holds for debit cards. EMV (which stands for Europay, Mastercard, and Visa; the businesses that pioneered the technology) cards have a microprocessor chip embedded in them. These chips generate a one-time code for each transaction vs. the older type of cards with a magnetic stripe, which didn’t have this capability and were easier for fraudsters to replicate.
When customers swipe or dip their EMV card, the chip communicates with the terminal to verify the transaction and may require a PIN or a signature. Thanks to such protocols, customers usually enjoy a high level of security when shopping in-person with an EMV card.
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Secure Online Payment Best Practices
There are a few best practices that help keep online payments secure. For consumers, this can mean using the latest methods to ensure safety. That might involve using digital wallets or cards that have embedded EMV chips.
For businesses, secure online payment best practices can depend on working with trusted payment providers and gateways, ensuring encryption, and adopting multifactor authentication (MFA) techniques. The details are shared below.
Secure Payment Processing for Businesses
If you run a business, it’s important to take steps to ensure secure payment processing. Here are some steps to consider adopting.
• Make sure your payment provider is compliant with the industry’s best practices, meaning they meet PCI DSS (Payment Card Industry Data Security Standards).
• Your payment gateway (the software that captures and sends card data for processing) should be reputable to keep checkout details safe.
• Support multifactor authentication to add another level of security to transactions.
• Avoid storing customers’ full card numbers and CVV codes in your databases or on your local servers. This could leave you vulnerable to hacks.
• Prioritize end-to-end encryption of data to keep a high level of payment security.
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The Takeaway
Secure payments are a cornerstone of running a business. They can keep your enterprise and your customers safe from unauthorized access to financial information. These kinds of secure transactions can be an important part of running and growing your business.
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FAQ
What is the most secure way to pay online?
Among the most secure ways to pay online are digital wallets and EMV chip cards, whether debit or credit. These can keep sensitive financial information safe during payment processing.
What makes a payment system secure?
What makes a payment system secure can include a few key features, such as encryption, tokenization, and multifactor authentication. Also, payment systems should be up-to-date on and compliant with the latest industry protocols.
Is it safe to save your credit card information on websites?
Saving your credit card information on websites can carry risk. There can be data breaches and hacks that make your sensitive financial information available to criminals. It can be prudent not to store your credit card details on websites and instead use digital wallets.
What is tokenization in payment processing?
In payment processing, tokenization replaces a credit card number with a unique, random string of characters. This helps enhance the security of a sale.
How can small businesses ensure secure payment processing?
There are several ways a small business can work to ensure secure payment processing. Collaborating with a PCI DSS-compliant payment provider and a reputable payment gateway, supporting multifactor authentication and end-to-end encryption, and avoiding storing credit card details can be good methods.
Photo credit: iStock/Daviles
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