Digital Payments – Security vs Speed

Digital Payments – In Digital payments world a million dollar question which still not being answered, “What is more important security or speed (Performance & Ease)“. Financial system security design principles can be organized into logical groups. For example, least privilege system can be considered as a principal and can appear in a group under structure/trust. In the case of “Secure System Evolution,” is the principal is in its own group. This is the part-2 of my earlier post – Digital Wallets: Innovation vs Security

 

Information and Payment Security – Digital Payments

Security of subscriber’s data in terms of KYC information, transactions details and sensitive information like bank account, mobile wallet number, card details are pivotal and the key to any financial system. While making any payment with digital channels information security and data protection are the most critical components. On a second note the kind of payments, amount of payments and velocity detection etc. under digital payments security; might seem like complicated matters. The potential risk in this is like the one at a theme park on a broken roller coaster.

Digital wallets or eMoney wallets are vulnerable to cyber-attacks and hackers who are able to escape with users sensitive financial information stored in your digital wallet on the system. To handle such issues normally security machines are applied.

On payments systems, a digital certificate which is an electronic file that uniquely identifies individuals and web sites on the internet. This file enables a secure, confidential communications channel between the user and the server. It associates the name of an entity that participates in a secured transaction (e.g., an email address or a web site address) with the public key that is used to sign communication with that entity in a cryptographic system.

 

What Is The Perfect Payments Experience?

So the question here is what is called as perfectly secured payment system with best/perfect user experience? The answer is simple “No such system is perfect or 100% secured”. The systems cannot be secured in one of these activities are not one time at least. Information and cyber security is culture and not process, we need to secure our systems every millisecond as we breathe every time. As payment technologies progress, so will the need for securing and protecting them will rise. The methods to secured our day to day payments need daily improvement.

Given that the mobile payments industry is still a very nascent industry. This industry really doesn’t have clear standards and significant regulatory frameworks. Most of these players are in autoplay i.e. self-regulation mode. The utmost urgency/importance is to have guidelines that are produced to assist mobile payment platform developers and mobile payment providers.

Recommendation on security, controls and privacy are vital and should be implemented to help & ensure that consumers, retailers and the financial institutions that underpin the ecosystem by processing and clearing transactions are all safeguarded from cyber threats.

Traditional banks have refused, albeit unknowingly, to adjust to the ever-changing environment. Clearly, it’s no longer a brick and mortar system that the general economies still require, but critical banking products that cater for the diversity of customer needs; banking on the go solutions powered with artificial intelligence, machine learning and blockchain to be more specific.

 

Today Banking is The need, not Banks

It is no longer the four-page forms that customers need to complete before they can open an expensive to maintain a bank account. A new vibrant shared technology infrastructure will help.

Digital wallets store the value in the digital form and allow an individual to purchase an item online or send funds to friends or family. Depending on the type of digital wallet used, the information stored might include debit, credit, prepaid or loyalty card data as well as personal information of the cardholder such as driver’s license, health card, loyalty card(s) and other ID documents. Use of tokens and cryptograms to authorize mobile payment transactions are now common to provide high-class security.

Going back to detection (Velocity detection) and prevention(Security Certificates) method i.e. Certificates are issued by a trusted third party, a certificate authority (CA), which verifies the identity of the certificate’s holder. They are tamper-proof and cannot be forged. In reality velocity detection is defined as checking the historical shopping patterns of an individual and matching that record against their current purchases to detect if the number of orders by the cardholder match up or if there appears to be an irregularity.

The Secure Element The Secure Element (SE) is a tamper-resistant chip with a secure micro-controller which is designed to securely store confidential and cryptographic data. The SE is a critical component in every mobile payment application but the way it is used varies greatly depending on the type of mobile payment application and also the type of mobile payment modes used; we will discuss the implementation details in the section that follows.

Security, privacy, convenience and ease of transaction are more important where cash handling is involved. For the electronic transaction, the cost of cash handling can be invested in security. The rapid change in technology, in terms of flexibility and ubiquitous use across the globe, is the necessity. The economy which is up-to-date in technology, both for products & security gains more confidence in consumers.

 

Strategies for Improving the Digital Payment System

With trained & dedicated manpower and info-security policies/guidelines, we can secure our system. Policies on the use of encryptions, secure socket layer (SSL), secure hypertext transfer protocol, payment card industry compliance (If plastic money is involved), safe logins (2-way authentication) and digital signature should be clearly defined. Digital payments providers should aim to follow security recommendations for systems they use to provide mobile/digital payment services on.

Few modes of Digital Payment

• Banking Cards (Credit, Debit, Stored value/prepaid) – Used in conjunction with PoS machines, ATMs, Online.
• Instant Payments – authenticates the identity of the user like a debit card does use the phone as a tool instead of a separate card – Smartphone & bank account.
• Digital Wallets – a type of electronic card which is used for transactions made online through a computer or a smart-phone – Utility of e-wallet is the same as a credit or debit card-Make paperless money transaction easier.
• USSD – Unstructured Supplementary Service Data – Mobile banking for feature phones.
• Banking transaction out of the bank at PoS with the help of Banking Correspondent.

Secure Electronic Transaction enables interoperability between applications across diverse platforms and operating systems. Authenticating cardholders and merchants, ensuring confidentiality of information and payment data, define protocols and electronic security service providers, Digital Wallet Software − Secures cardholder’s online purchases via point and click interface. With the public key that is used to sign communication with that entity in a cryptographic system.

Failure to secure sensitive information can cause major damage to the service provider’s organization in terms of financial fraud, identity theft, legal regulations, loss of consumer confidence, etc. Security controls that can be employed in making a payment handling application more robust and frustrate the breakers at the hardware level before reaching the application level.

 

Points to Note:

All credits if any remains on the original contributor only. We have covered all basics around adapting cashless payment models. The importance of such a quality system with full of big data are the backbone of any digital economy. In the next upcoming post will talk about implementation, usage and practice experience for markets.

 

Books + Other readings Referred

• Research through open internet, news portals, white papers and imparted knowledge via live conferences & lectures.
• Lab and hands-on experience of  @AILabPage (Self-taught learners group) members.

 

Feedback & Further Question

Do you have any questions about AI, Machine Learning, Telecom billing/charging, Data Science or Big Data Analytics? Leave a question in a comment section or ask via email. Will try best to answer it.

 

Conclusion – What makes a digital payment innovation fly or die. This paper has precisely this as its primary objective and as a secondary objective to define minimum measures that should be followed by mobile payment providers.

Given the change of pace over the last five years, banks and now fintech’s may feel they need to decide between complying or competing, as they explore new technologies that meet the challenges of digitalisation and changing consumer behaviour. Open banking services and developer-friendly APIs which are basic or underlying principals of BaaS and BaaP. One of the biggest concerns relating to security in e-commerce applications is the use of correct, reliable and secure payment method i.e use of the card, Internet banking, mobile payments or instant payments.

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