Online business is a major part of the business world today and provides an easy way to buy and sell goods and services. The general model for an online payment transaction includes five parties: the client, the merchant, the client’s financial institution, the merchant’s financial institution and the payment gateway.
The payment gateway provides a secure connection to carry out transactions and verifies, accepts or declines payments transactions on behalf of a merchant. The ability to transfer payments securely is a vital component of a payment gateway.
Payment gateways should make sure merchants always get paid when a purchase takes place so they do not have to worry about fraud or credit risk. They should take all precautions to ensure safe and secure transactions. Here are some of the security methods payment gateways use to safeguard payments.
Data encryption is the main method payment gateways use to safeguard payments. Once customers enter their card details, they are encrypted through a public key and can only be decrypted by the payment gateway’s private key. This reduces the possibility of access to customer data by unauthorized parties during transmission from the gateway to the acquiring bank.
Whether they like it or not, chargebacks are an inevitable factor in merchant buyer relations. Merchants can get chargeback management software from Accertify, a leading online gateway provider, that reduces the resources required to manage and respond to chargebacks by up to 50 percent and helps improve win rates.
Secure Socket Layer (SSL)
Payment gateways make use of SSL to protect sensitive customer information. This standard security protocol establishes an encrypted channel to allow for the safe transfer of private data over public channels, such as between a web server and a browser. Most payment gateways use this protocol to make the transfer of data between different parties more secure.
Secure Electronic Transaction (SET)
This protocol secures the transmission of any customer’s card details during an online transaction. It prevents merchants from accessing sensitive information as it blocks out the details of the debit or credit cards.
Trust is established with the use of digital customer signatures and sensitive information is only provided to necessary parties. The mechanisms, such as using verified, digitally signed messages and public key certificates, provide a high level of security and privacy for all participants in transactions.
Tokenization substitutes a credit card number with a randomly generated string of characters. This one-time code or “token” cannot be traced by the cardholder and the numbers are meaningless without a decryption key.
In the event of a data breach, hackers cannot decode the numbers and this reduces the risk of payment fraud through using stolen data. As sensitive card data is not saved on merchant networks, this also protects the merchants.
PCI DSS Compliance
Payment Card Industry Data Security Standard (PCI DSS) compliance helps merchants and financial institutions to provide secure payment solutions. Some requirements under this standard include:
- Use validated payment software at the point-of-sale or website shopping cart.
- Do not store sensitive customer data on computers.
- Encrypt transmission of customer data across any open public networks.
- Use a firewall on networks and PCs.
- Teach employees about security measures, such as protecting cardholder data.
Merchants who use a payment gateway do not have to worry about PCI compliance as a secure payment gateway will offer PCI level 1 security.
The merchant can rely on the payment gateway compliance with these security standards. Payment gateways, therefore, act as third-party solutions that give merchants the latest and best security measures they need.