The trend to internet transactions was further accelerated by the coronavirus outbreak. People now purchase and pay online rather than with cash. As of 2021, over 2 billion people worldwide used mobile payment apps. In the United States, 67% of consumers utilize their bank’s mobile app, while a record 41% of bank clients are now solely digital. Check out this blog to learn more about the Top 5 Tips for a Secure Fintech Payment System.
The quick transition to digital payments gave entrepreneurs of new businesses the chance to enter the market with, on the one hand, creative and practical solutions. However, it also raised concerns about payment security. You save user credentials whether you’re making a subscription-based fitness app or a mobile banking app. After you’ve done that, you should do all in your power to create a payment system that is safe and difficult for hackers to access.
Appic Softwares has contributed to the development of compliant apps that adhere to the security criteria of payment systems. I’ll explain to you today the most popular security procedures, how and what they may save you, and why payment security is essential to a successful product.
Key Security Concerns to Know For a Secure Fintech Payment System
Knowing about fintech payment security flaws is crucial if your product handles customers’ financial data, which is highly probable. This will help you anticipate consumer complaints and appropriately evaluate your level of responsibility. I’ve compiled the top three payment security problems.
Cyberattack
Fintech payment security concerns about cyberattacks are the most common. The number of cyberattacks against financial institutions surged by 118% alone in the first half of 2021. In brief, a cyber assault results in data leakage since hackers may access your users’ login information, account balances, and credit limitations. Hackers can steal data in a variety of inventive ways, including the following:
- hacking a password or code;
- takeover of a website;
- refund swindles.
Data leaks may seriously harm a business’s credibility and reputation. Furthermore, the cost of recovery in such a circumstance will be high.
Trojan Malware
Another successful strategy that hackers employ against applications is Trojan software. It takes place when people download a file or application that is infected with malware. These programs are frequently hidden inside other mobile apps, such as games, and once loaded, give the hacker access to all the data on the device, including the ability to take control of it.
It turns out th
at many finance organizations are susceptible to malware assaults, despite the common misconception that most businesses secure themselves with firewalls or antivirus software. The security of their payment systems is insufficient to prevent hackers from accessing bank accounts, altering PINs, or making money transfers.
Once more, it may result in people losing trillions of dollars, and it destroys the trust and reputation of firms.
Untrustworthy Third Parties
Finally, you should be mindful of third-party suppliers’ Fintech payment security practices. The non-compliant third parties, to be precise. Businesses frequently integrate third-party suppliers to manage digital payments to boost productivity and cut expenses. You have access to a huge variety of third-party suppliers, such as:
- payment gateways;
- suppliers of point-of-sale systems;
- suppliers of payment gateways.
The worry is that not enough third parties may handle and keep user data in an unsafe manner, putting it in danger. Fourth- and fifth-party risks can also arise from third-party suppliers that contract out their work to other parties.
How Do Different Apps’ Online Payment Processes Operate?
It is now evident that having strong payment security protects your company from:
- hazards to one’s image;
- user attrition;
- court expenses.
However, it’s still unclear how precisely payment security regulations can protect you. We should investigate the online payment procedure in more detail to determine how money is transferred from a client to your company and how banks handle these transactions. Three examples will be examined: an online banking app, an eCommerce marketplace, and a subscription-based app.
App with a Subscription Model
One of the challenges of developing subscription-based software is managing recurrent income. This implies that you must keep track of your client’s payment details and correctly bill them at predetermined times. How much work you put into this will depend on how your payment system is configured.
- The first choice is to create a custom payment system.
- Using third-party software that is already available is the second option.
If you want to create your system from the ground up, you need to take into account the engineering resources needed to create and manage your billing software. These items cost money and need time; I’ll go into further detail later. Thus, I would advise you to consider the second choice. What we did on Plai was this.
We put in place Stripe, a compliant payment gateway. Stripe turns the card number that a user provides to subscribe to Plai into a token. This means that rather than seeing and storing the card number itself, we operate with the token. We guarantee that no user credentials will end up in the wrong hands in the event of an attack.
Marketplace for E-Commerce
Because eCommerce marketplaces receive and process payments on behalf of vendors or service providers, they have some of the most complicated payment policies. This procedure has a few challenges, such as:
- checking the authenticity of vendors;
- controlling the transfer of money;
- charging a service charge on every transaction;
Additionally, you must continue to be a payment facilitator with card networks like American Express, Mastercard, and Visa to offer payment features. However, these card networks have tight rules, so it’s not the end. Millions of dollars in initial and recurring expenses are needed for this procedure, which might take months.
App for Online Banking
Thus, we tackled online banking, which is the most intricate app category in terms of payment security. When making card payments online, there are four parties involved.
Cardholder
An individual with a credit card;
Retailer
The company proprietor;
A Buyer
A bank that handles credit card payments to the issuing bank via card networks (American Express, Mastercard, and Visa);
Issuing Bank
On behalf of the card networks, the bank extends credit and provides cards to customers.
If you ask me at Appic Softwares how to facilitate an online transaction as smoothly as possible, I would advise you to do the following actions:
- Create a bank account for your business.
- Join forces with a payment processor or BaaS provider to let them assist you in directing app purchases to card networks.
- Establish a gateway for payments.
Since using gateways to add an online payment system to your app is quick, easy, safe, and efficient, I frequently suggest our clients do so. The data that gateways transmit to the acquirer and subsequently to the card networks is securely encrypted. As I’ll describe later, it assists you in adhering to security criteria known as PCI standards. After that, the issuing bank gets in touch with the card networks and decides whether to approve or reject the payment. The gateway or acquirer receives the notification from the issuing bank and uses it to inform the user whether the payment was approved or denied.
Of course, you have the option to create your payment connection rather than utilizing a payment gateway provider, but the costs and time involved will be significantly higher.
5 Payment Security Requirements to Avoid Skimming and Stay Compliant
At first glance, payment security could look like alphabet soup. So let us set the record straight and explain all of these correspondences.
PCI Standards
The international payment networks Visa, MasterCard, American Express, Discover, and JCB founded the Payment Card Industry Security Standards Council (PCI SSC), which publishes regulations known as PCI DSS, or Data Security Standards, to reduce fraud and data breaches throughout the payment ecosystem.
All organizations that handle or accept credit cards are required to adhere to PCI standards. To speak the truth, there are many steps to take, but these are the top three:
- Gather and safely send sensitive card information.
- Maintaining the security of data entails encryption, constant observation, and security testing of card data access;
- Make sure that the necessary security controls—such as questionnaires, external vulnerability scanning services, and third-party audits—are implemented every year.
Depending on how many credit card transactions your company handles in a given year, there are four distinct PCI compliance levels. We utilize the flowchart on page 18 of this PCI document to determine which level best fits the project.
Keep in mind that the PCI DSS criteria are subject to change; therefore, you should either become a PCI Participating Organization (PO) or keep a close eye on them.
Tokenization
Tokenization is one approach to increasing payment security. How does it function? For instance, customers’ card information is instantly changed with symbols and numbers created at random in your app as they input it. We refer to this arbitrary arrangement as a token. The merchant sees this token at all times throughout the transaction. Thus, companies may handle payments without having to deal with sensitive customer data.
Tokens function by using public and private keys. As developers, it is our responsibility to safely store the token keys when we use tokenization.
3D Protection
A relatively recent payment security technique is 3D security. It is not sufficient for fraudsters to obtain card details to conduct an online purchase, thanks to 3D security. The consumers are required to verify a purchase using a digital banking app or by using a one-time password (OTP) that they get via email or text message after inputting their payment card information.
SSL Protocol
You’ve all definitely seen Secure Socket Layers (SSLs), but you may not have realized that they were still another layer of data security.
SSL is an internet protocol that secures web pages that handle credit card payments from customers and encrypts all website connections. A simple way to determine whether a website utilizes SSL is to look for the lock icon in the address bar or confirm that the website URL starts with “HTTPS.” Many browsers have made it standard practice to notify users when a website isn’t utilizing SSL.
For company owners like you, the good news is that purchasing an SSL certificate is less expensive and takes less time than purchasing a PCI. Just remember to renew your credentials before their expiration. The bad news is that obtaining SSL certificates for phony websites is just as simple and inexpensive for hackers.
Know Your Customer (KYC)
Verifying bank clients’ identities either before or during their use of your app is known as Know Your Customer (KYC) verification. KYC entails the following actions:
- verify the identity of the client;
- recognize the type of activities that customers engage in;
- make sure the money coming from the clients’ accounts is authentic;
- calculate the customer-related fraud risk.
The following are some of the best services for KYC assistance:
- Microblink is a business that creates AI-driven solutions that use camera input to automate the entry of personal data.
- Fourth line: a fintech company for digital KYC that is among the fastest-growing in Europe.
- Jumino is a startup that guards against fraud and financial crime using AI, biometrics, and validated liveness detection.
Consider the KYC process to be similar to an airport security check. It enables you to verify that potential customers are who they say they are and that you can trust them sufficiently to let them use your product.
Best Apps for Fintech Payment Gateways List
A fintech payment gateway may be quickly and affordably implemented by a business to allow safe online payments between bank accounts.
I’ve put together a list of the best payment gateway applications that provide high-quality, legally compliant services since we at Appic Softwares frequently recommend using payment gateways for our clients.
- Stripe is a global online payment processor available to all sizes of internet companies.
- One of the most established online payment systems for payments made both online and in-store is Wordplay.
- Adyen is a payment platform designed specifically for online retailers.
- WePay is an online payment provider that offers safe application programming interfaces (APIs) to SaaS and ISVs.
- PayPal is an online payment system that facilitates safe money transfers for both people and companies.
With the help of the payment platform Payoneer, businesses may send and receive money without needing a merchant account.
Conclusion
The first issue you will face if you want to create an app that uses user credentials is payment security. There are three primary security concerns to be mindful of:
Trojan software; cyberattacks; untrustworthy third parties
To provide a secure and compliant payment system, you must adhere to payment security requirements. It’s crucial to connect with individuals who are knowledgeable about the best payment security solutions to use because the payment process and security solutions vary depending on your goods. At Appic Softwares, we provide our clients with fintech app development services and are well-versed in payment security regulations. Thus, get in touch with us if you require assistance creating your project.
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