As digital payments continue their rapid ascent, understanding the accompanying cybersecurity challenges has never been more critical. Furthernore, with Statista forecasting a robust 9.52 percent annual growth rate for digital payments from 2024 to 2028, the urgency to address these security concerns intensifies.
While this growth brings unparalleled convenience, it also introduces new security vulnerabilities that must be addressed. Cybersecurity is fundamental in safeguarding confidential data against hacking, fraud, and data breaches. Implementing effective cybersecurity measures can also maintain trust between businesses and clients while preventing financial loss. To optimise cybersecurity, identifying the current threats to digital payment systems is a must for businesses and consumers.
Current Cybersecurity Threats
Digital banks face various threats that continually evolve as technology advances. By addressing these challenges head-on, banks can protect their users and continue the growth of digital payment.
Many types of cyber threats can disrupt digital payment systems:
Phishing attacks: These attacks use deceptive emails, phone calls, or texts to trick victims into revealing personal information, such as login credentials and financial details. The scam can lead to other types of cyber threats.
Malware: Malicious software that infiltrates systems to steal data, monitor activities, or lock accounts. Various forms of malwares have different functions, such as Trojans, Worms, and Spyware.
Man-in-the-Middle (MitM) Attacks: intercept communications between the user and the bank allowing attackers to steal sensitive information or funds.
Data breaches: Unauthorised access to digital bank databases exposes vast amounts of sensitive information, including personal and financial data.
Ransomware: It is an attack that employs malware to infiltrate computer systems to steal data, monitor activities, or lock accounts. The attackers then demand payment and keep disrupting the devices/websites until they are paid.
Credential stuffing: Attackers use stolen usernames and password combinations from other breaches to gain unauthorised access to accounts.
DDoS and DoS attacks: Distributed Denial-of-Service (DDoS) attacks overwhelm the bank’s servers, making online services unavailable to customers. Unlike the Denial-of-Service (DoS) attack where a single source is used to flood the target, DDoS use multiple sources of compromised devices (botnets).
Insider threats: Employees or contractors with access to sensitive information may intentionally or unintentionally cause data breaches or other security incidents.
Social engineering: Manipulating individuals into divulging confidential information through psychological manipulation.
Zero-Day Exploits: Attacks that exploit previously unknown vulnerabilities in software or hardware before patches are available.
Cybersecurity Measures
Encrypting data is essential to convert the personal information into a secure format. This encrypted data can only be accessed with the correct key or description. This ensures that the data remains secure and unreadable after interception.
Multi-Factor Authentication (MFA) adds a layer of security by requiring some form of verification before granting access to the platform. Tokenisation replaces critical payment data with a unique or random token that cannot be hacked once intercepted.
Biometric verification, such as fingerprint and facial recognition, provides additional security by utilising unique physical characteristics. These include the shape of the face and the outline of a fingerprint, both of which are difficult to replicate.
Financial institutions have also innovated to improve cybersecurity by implementing artificial intelligence (AI). For example, JPMorgan Chase has implemented an AI-driven fraud detection system. This application is used for monitoring transaction activity in real-time. It can also detect potential threats or fraudulent transactions using the data analytics tool.
Regulatory Requirements
Financial companies are obligated to meet regulatory compliance. It is important to build customers’ trust and avoid legal or financial penalties. For global financial institutions, regulatory issues might be more complex as each country has its version of rules. As cyber threats evolve, regulators continuously update and enforce these requirements to address new challenges in digital payment systems.
For instance, UK regulations have set strict rules to ensure the security of digital payments. These include data protection measures, and companies that do not prioritise cybersecurity will face substantial fines. Similar regulations have been implemented across European Union (EU) Member States, compelling financial institutions to enhance cybersecurity to create a safe digital payments environment for consumers.
- Cybersecurity in FinTech
- Digital Payments
