One of the most notable trends of the past two years has been the movement towards digital payments. While this trend was certainly already underway, the events of the COVID-19 pandemic over the past two years have dramatically accelerated this shift.
According to recent statistics from the World Bank, approximately two-thirds of adults worldwide now make or receive digital payments. In developing economies, the share of digital payments has increased from 35% in 2014 to 57% in 2021.
This trend towards digital payments and away from cash brings many benefits. Perhaps more immediately, digital payments are much faster. Rather than spending minutes counting bills and coins for larger and smaller purchases, technology such as contactless payments allows you to quickly and securely make an instant payment.
While the convenience factor is certainly one of the most compelling justifications for switching to digital payment methods – this is true for business owners and customers alike – one of the often overlooked benefits of payment methods digital is their degree of security.
Interestingly, these security benefits extend to in-person and online digital payments. In addition to helping you avoid carrying lots of cash that puts you at risk of theft, digital payment methods also provide additional protection when making payments in online environments.
But how exactly do digital payment methods help you stay safe online? And what new technologies are payment providers deploying to enhance these protections? Keep reading to find out!
SSL protocol
One of the most important technologies powering the online payments industry today is something called the Secure Sockets Layer (SSL) protocol.
SSL is a technology that can be incorporated into websites. It works by encrypting all information processed through the website. This is particularly useful when website users enter information during checkout processes. Thus, information such as credit card details and other personal information can be encrypted.
To check if the website you are using uses SSL, look for a padlock symbol in your browser’s address bar or check if the website starts with “https”.
SSL technology is pretty much the industry standard in industries such as iGaming where large volumes of sensitive financial data are handled. Many comparison sites only list iGaming platforms that use SSL technology to secure their payment processes, so you can rest assured that you’re in good hands!
PCI Compliance
Another commonly used security feature when digital payments are processed is PCI compliance. PCI DSS is a set of regulations created by major credit/debit card brands. This set of regulations defines the specific data security requirements that merchants using and processing these cards must meet.
PCI compliance is required by these card companies to ensure online transactions are as secure as possible and the risk of identity theft is reduced. Any merchant wishing to process or store card data from these vendors must be fully PCI compliant.
3D secure
If you have ever made an online purchase, you may have come across 3D Secure.
3D Secure is a relatively new innovation in the world of digital payments and provides an additional layer of security for digital transactions. 3D Secure is basically a messaging protocol that uses three different domains to process and verify the transaction.
When a 3D Secure payment is initiated, the system will ask users to verify the payment. Verification is performed using tokens, biometrics or other information. This verification request is usually time-sensitive, which also helps to limit the possibility of fraud.
Address Verification Service
Also known as AVS, Address Verification Service is a security measure used to prevent fraudulent debit and credit card transactions.
AVS is essentially a tool that checks whether the billing address provided by the cardholder to the merchant matches the address associated with the card. This verification process is initiated when the merchant requests authorization during a credit or debit card transaction.
Once the merchant receives a response code from credit card processes, the transaction can be fully processed. Address mismatches or misspellings will prevent the transaction from completing.
Why are safe and secure online payment methods so important?
While this is just a brief overview of some of the most commonly deployed technologies in the payment processing space, it still gives us an idea of the different technologies on offer.
Having safe, secure and reliable online payment methods is especially important today given the rise in digital payment fraud.
This trend is an unfortunate byproduct of the rise of online and digital payments, with fraudsters finding new and innovative ways to steal from unsuspecting customers.
The rise in online fraud is obviously a global trend, with many countries reporting a significant increase in levels of theft over the past couple of years.
In the UK, for example, victims lost £1.3 billion in 2021 alone, representing an almost 40% increase in payment scams. Similarly in the United States, a 25% increase in digital fraud was reported in the first four months of 2021 compared to the last four months of 2020.
It is this broader context that has made safe and secure online payment methods more important than ever. As the global economy becomes increasingly digital, it will be important to continue to develop new technologies that can keep pace with criminals trying to undermine them.
In addition to developing new cutting-edge technologies, it will be equally important to increase digital literacy among adults and children. This will ensure that we equip ourselves with the practical knowledge necessary to ensure our safety online, whatever digital payment method we choose to use.
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