Online Payment Systems have gathered more traction as e-commerce has boomed over the years. What started with payment gateways as PayPal has now evolved to various payment methods like E-Wallets and QR codes. Some of the more commonly used and preferred online payment methods include credit/debit cards, mobile payments, online bank transfers, e-wallets, and prepaid cards/gift cards for local transactions and international transactions alike.
The usage of all these online payment systems requires that a certain amount of personal information be disclosed to the relevant businesses, marketplace websites, or payee. Credit cards require users to provide their card details, name, and sometimes their addresses, while online bank transfers require the details of the receiving party as well the account number and bank name of the user. Newer methods like QR codes and mobile payments require the use of phone numbers, TouchID or PINs.
With the rising convenience of these payment methods come understandable concerns related to the private details that are shared with second or third parties. Possible issues include cases of fraud, identity theft, chargebacks, and unauthorised cross border transactions, which also brings up the issue of conversion rates, among other things.
While the e-commerce and banking industry are constantly taking steps to combat the aforementioned issues, no system is 100% unbreachable so both the business owner and the user must take proper precautions. To do so, it may be useful to learn what steps are being taken to protect your financial security, so here are some safety systems that have been introduced over the years:
Secure Sockets Layer (SSL)
SSL is a certificate that every e-commerce business owner should have for their site that provides a secure connection and encrypts credit card information.
Payment Card Industry (PCI) compliance
PCI compliance or PCI DSS, which stands for Payment Card Industry Data Security Standard, is a security standard meant to protect cardholders that applies to any organization, regardless of size or number of transactions, that accepts, transmits, or stores any cardholder data.
Multi-Factor Authentication
Two Factor Authentication uses a six-digit code that serves as a one-time password. Three-Factor Authentication is similar to Two Factor Authentication with an added layer of security like biometric verification. This discourages foul play with the requirement of a unique security PIN as well as security questions.
Automatic Logout
Many bank applications will log you out of your session after a certain period of inactivity to prevent others from being able to easily access your account and your details.
In Malaysia, Bank Negara has a regulation that specifically states that e-wallet funds can only be used for two things: refunds to users and payments to merchants. This was put in place to prevent companies from using the funds for anything other than its intended purpose. Additionally, the RENTAS system in Malaysia, implemented in 1999, was to improve the overall efficiency of the large-value payment system, though more specifically to reduce interbank settlement risk. On the off chance that there are unauthorized transactions, the local e-wallet by Touch n Go has implemented a money-back guarantee that ensures a full refund within 5 days should any unauthorized transactions be made using the platform.
Currently, card verification numbers are ranked as the most effective method in detecting e-commerce payment fraud as surveyed by e-commerce leaders with a rate of 54%. This is followed by biometric as the second most efficient with 53%. Besides that, two-factor phone authentication is also an effective fraud-detection tool with a success rate of 50%. Which is interesting as it has been predicted that 88% of consumer-bank interactions will happen through smartphones by 2022.