The payment gateway authenticates transactions by acting as an interface between shoppers’ financial institutions and merchants’ bank accounts. As a software application, it does this by conducting secure transactions and verifying user identification, among other functions. It tells the financial institution behind the customer’s card whether to send money to the merchant or not, depending on the authenticity of the transaction. This application is essential for any transfer of money from customer to merchant on the Internet.
Payment gateways provide additional layers of security in the authentication process, such as complex algorithms to detect fraud, and they employ sophisticated encryption protocols in order to protect data when a transaction is going through. The overall security of a payment gateway is very important if you want to protect yourself and your customers from fraudulent transactions. With those goals in mind, let’s take a look at the factors that make a payment gateway system secure.
Security Indicators
There are several features in a payment gateway application that indicate security levels that are satisfactory. The first thing to look at is data encryption. A payment gateway handles very sensitive financial information, and if security is weak, any hacker can peer into the gateway and make off with your customers’ financial information. You should ensure the website is secured with an EV SSL Certificate, which indicates highest level of encryption security by enabling green padlock and name of company/organization in the address bar that can be trusted. CVV2 verification is another layer of security to look out for, which ensures that the customer is paying with their own authentic card.
Next, you should consider your payment gateway’s PCI level. According to the PCI Standards Council, the Payment Card Industry Data Security Standard (PCI DSS) was developed in order to increase controls around cardholder data, so as to reduce credit card fraud. PCI Level 1 is the strictest standard in this respect, so a payment gateway with this standard is extra secure. Check for token technology as well, as this provides an extra level of security on top of everything else.
Customer data should be kept from your servers, and it should be nearly impossible for cyber criminals to get their hands on this data.
Common Anti-Fraud Tools
Your payment gateway should have robust and up-to-date anti-fraud tools, including geolocation, blacklist and OFAC list lookups, delivery address verification, identity morphing detection, AVS checks, and velocity pattern analysis. Your gateway doesn’t necessarily have to feature every single measure on the market, but the more layers of redundant protection, the better.
Think of it as casting a wide net. As CBS and other news outlets and security agencies have reported, cybercrime is at an all-time high. Cyber criminals have gotten very creative with their methods, and that includes methods of credit card fraud. The more anti-fraud measures your payment gateway system has in place, the less likely you are to get hit with fraud.
Active Chargeback Management
Chargebacks happen when fraudulent activity has been detected. When a customer calls up their bank and disputes a charge, the bank will take back money transferred to the merchant if fraudulent activity is detected. A good payment gateway should have some sort of chargeback management built in, which can protect you from unfair chargebacks.
Benefits of Tight Security
The benefits of a secure payment gateway increase exponentially over time, so it is worth investing more resources up front for a high-quality service. It is one thing to be protected from instances of fraud, unfair chargeback, and information theft. It is another thing entirely to have to rebuild your reputation as a trustworthy and secure merchant.
Network effects will increase your new customers, and you will keep plenty of loyal customers as well. To accommodate growth, Secure payment gateways not only protect you from loss, they actively help you build cred in your given market and ultimately increase your revenue. With the rise of cybercrime, it definitely pays to invest in a comprehensive and secure payment gateway service. Now that you know what standards to uphold, you shouldn’t have any problems finding the right one.