(This article was first published on Razorpay Blog.)
Three years, four years back, did you imagine that payment gateways would be so omnipresent in your life? Probably not. And yet, here we are. Today, you run into a payment gateway every time you’re making a digital payment. You interact with a payment gateway when you pay Rs 100 for groceries or when you buy an iPhone worth a lakh from an ecommerce company.
Payment gateways have, without doubt, made online transactions very convenient. But a lot of customers typically do face some kind of anxiety when they pay online. Even when we understand that the transaction is going to be secure, there is always a fear at the back of our minds when we enter in our card or bank details. It’s our hard-earned money on the line, after all.
However, since digital payments are not going anywhere but upwards in terms of usage, let’s understand how secure your online transactions are and what exactly a payment gateway does with your data.
Encryption through PCI-DSS compliance
First things first, a payment gateway does not store your data as is. The best payment gateways are PCI-DSS compliant. The PCI Security Standards Council is a global organization that sets compliance rules for managing cardholder data for all online payment systems. PCI-DSS is now the global standard for online security. What this means for you is that your online transactions are encrypted to ensure there is no data interception.
Basically, all the details that you enter like name, address, card information, netbanking details, etc are used only to complete the transaction. The payment gateway never stores sensitive information like CVV, pin or password.
https:// for higher security
Coming back to the encryption bit, data security begins the second you land on a website. A payment gateway uses the highest assurance SSL certificate, which allows TLS encryption of your data. This is a lot of jargon, but in simpler words, you can just look at the URL in your browser. An https:// protocol means that the website you are on is secure.
Most ecommerce companies today work with secure payment gateways to ensure that the data of their customers is not compromised. You can also check if the website or payment gateway page is secure or not by looking for the https:// in the URL, but to additionally understand how payment gateways ensure security, let’s look at something called tokenization.
Tokenization to prevent exposure of data
You enter your 16-digit card number into a payment gateway’s interface. What the payment gateway does is that it replaces this 16-digit number with a single token. This “token” is a unique set of characters that replace your original card number. This allows the payment to be processed without exposing your sensitive details. Tokens are assigned randomly, which makes it extremely impossible to reverse-engineer the actual card number from the token.
Let’s dig in deeper with an example. Tokens can be of two types–format preserving and non-format preserving. Format preserving tokens maintain the appearance of the card number while non-format preserving tokens are alphanumeric numbers.
|Card number||Format preserving token||Non-format preserving token|
|5945 XXXX 5953 6391||4111 8765 2345 1111||25c92e17-80f6-415f-9d65-7395a32u0223|
The best payment gateways use non-format preserving tokens as they are more secure.
Beware of common payment frauds
While a payment gateway does its best to ensure that your data cannot be breached, there are fraudsters out there who are working equally hard to try and exploit your sensitive information. As someone who transacts digitally, you can also do your bit by understanding common methods of frauds to make sure you don’t fall victim to them.
|Common Online Payment Frauds|
|Type of fraud||What it is||What you can do|
|Phishing or spoofing||Process of accessing your personal information fraudulent emails or websites that claim to be legitimate||Think twice before you click on links that appear fraudulent and don’t give out your personal information unless you’re 100% sure of the recipient|
|Data theft||Card and other data stolen from businesses by dishonest employees||Don’t deal with companies that you are not aware of or ones that don’t maintain stringent data security norms|
|Fake schemes and offers||Offers that provide heavy discounts on illegitimate products||Don’t fall for offers that seem too good to be true. Verify the company and the product before you make the purchase|
Over and above this, you should also use two-factor authentication to make online payments. It adds an extra layer of security to your digital transactions. For example, even if your data is compromised and someone gets access to your card details, they won’t be able to complete a transaction without the OTP that comes to your phone number if you have two-factor authentication enabled.
In conclusion, payment gateways and online transactions are by and large secure in today’s world. You can go ahead and transact digitally with sufficient peace of mind. Just ensure that you keep your eyes wide open to not fall into any traps.