Consumers want to feel confident about the security of their financial data when they make a payment transaction. With high-profile security hacks making the news on a fairly regular basis, consumers want to know that the businesses they trust with their business have robust payment system security.
According to the Nilson Report, credit card fraud losses reached 28.58 billion worldwide in 2020, and this number is only growing. By 2030, when total payment card volume is expected to reach 79.14 trillion, it is projected that fraud losses will reach 49.32 billion. The United States also continues to account for a greater percentage of global card fraud than total card volume. While accounting for only 22 percent of global card volume in 2020, the United States accounts for 36 percent of card fraud.
With the addition of new payment types, including emerging and alternative payment methods, comes an increase in payment system complexity and the rising risk of data breach occurrences and data theft. These security breaches pose a serious threat, consuming significant amounts of time and resources, decreasing customer trust, and potentially putting your business and your customers at risk.
To decrease the risk of loss, merchants must implement security features, products, and services that protect customer information and insulate their payment systems from security risks. A payment orchestration partner can help businesses improve their payment processes by enabling greater payment system security.
What are ways to enhance payment system security?
Encryption and tokenization are primary methods for keeping payments secure and protecting cardholder data. Encryption is a critical component of any secure payment infrastructure and can be done as either point-to-point encryption (P2PE) or end-to-end encryption (E2EE). Tokenization is a powerful technology that can protect and remove cardholder data from your systems.
Ensure Payment Security With Encryption
A critical security component in any data environment, but especially in the payments industry, encryption is the process of converting information into an unintelligible form except to holders of a specific cryptographic key. Merchants have the flexibility to implement a variety of encryption technologies for their business, including:
- Point-to-point encryption (P2PE) – using this encryption method, the card entry device encrypts the cardholder data, such as the primary account number (PAN) and sensitive authentication data (SAD), and the payment host decrypts it.
- End-to-end encryption (E2EE) – with this encryption method, the PAN and SAD are encrypted at the point of interaction (POI) with the payment instrument and the decryption task handed off to the processor.
Beyond the obvious protection of data, encryption provides several other benefits, including:
- Reduced PCI Scope – Because the scope of a PCI examination is limited to the components in a given system that contains sensitive information, by encrypting sensitive information and making it useless to fraudsters in the event of a breach, businesses can help reduce the scope of a PCI examination.
- Relief from Breach Notification – In most states in the United States, a business that has suffered a breach must notify anyone whose data was compromised. By implementing encryption technology, businesses eliminate the ability to compromise sensitive data and therefore reduce many of the costs associated with a typical data breach.
Secure and Protect Identifying Information with Tokenization
Tokenization is a further way to safeguard customers’ personal information and limit exposure to hackers. By using unique identifiers to store payment data, merchants can protect and remove cardholder data from their systems without compromising security. And, unlike encryption, which uses algorithms to generate incomprehensible characters, tokenization is irreversible, making it impossible to hack. There are a number of different types of tokenization, such as:
- Transaction-based tokenization
- Card-based tokenization
- Numeric and alphanumeric card schemes
Powerful tokenization technology protects and removes cardholder data from your systems. Tokenization can be used for a variety of uses and circumstances:
- Card on File / Mobile Wallets: Provides convenience for customers by letting them store payments for later use.
- Subscriptions and Recurring Billing: Secure and convenient management for automatic and recurring payments.
- Permanent Tokens: Replace the PAN and reuse the token as often as necessary.
- Supplied or Generated Tokens: Utilize existing or third-party provided tokens.
- Token Per Transaction: Generate a token for each transaction where no storage is needed.
Enhanced Payment System Security with a Payments Orchestration Partner
Merchants need to be confident that they will not compromise security when collecting customer data. With a suite of enhanced data security solutions, OLS Payments can help secure and protect cardholder data and personally identifiable information in your payment system. Contact us today to learn how OLS Payments can help you implement the right solutions and features to protect your payment systems.
- Consumers want to feel confident about the security of their financial data.
- Security breaches pose a serious threat, consuming significant amounts of time and resources.
- Encryption is a critical component of payment system security.
- Tokenization is a further way to safeguard customers’ personal information and limit exposure to hackers.
- OLS Payments can help secure and protect cardholder data and personally identifiable information in your payment system.