Securing Payment Gateways and Ensuring Crypto Tax Compliance: A Comprehensive Cybersecurity Approach
Online businesses are susceptible to various types of cyber threats. While there are many ways that hackers can sabotage the payment process, there are also helpful security protocols that minimize the chances of this occurring.
More importantly, many innovative businesses are now utilizing cryptocurrencies as a way of conducting quicker and safer transactions. While blockchain ensures that transactions go as mentioned, there are still security protocols that should be put in place.
As much as 82% of cryptocurrencies have been exposed through various DeFi platforms. Frauds that occur with cryptocurrencies still need to be addressed just like regular scams, and processed according to regulations.
Payment security and gateways explained
Whether you purchased a thousand dollars worth of computer equipment or a small decoration from Amazon, you’ve been highly likely in touch with a payment gateway. This is one of the most important technical aspects of e-commerce and online stores.
Payment gateways are services that require customers to fill in their payment info, which they analyze, authenticate, and ensure that the transaction happens efficiently. It’s expected that payment gateways make these transactions quickly and securely.
This is similar to physical point-of-sale terminals that are common in supermarkets and restaurants. Most importantly, payment gateways are there to bridge the gaps between customers, restaurants, and financial institutions.
Holding such an important place, payment gateways need to be followed with the right security practices, as there are serious consequences if any of the participants in the payment process are harmed. Payment gateway security is important for guarding the credit card data of your customers.
According to the regulation called General Data Protection Regulation companies can suffer serious fines if they lose or leak any type of customer data, yet the penalties are even higher for financial data. Additionally, payment service providers can also impose penalties if their terms are harmed in any way.
If being fined by two different regulatory bodies isn’t enough, businesses that are tied to any type of fraud or misuse of their user data will certainly experience serious blows to reputation and profit.
Hopefully, the previous paragraphs were enough to outline the troubles that companies can experience if they don’t ensure maximum payment security. To help you understand how to secure payment gateways and ensure crypto tax compliance, we will mention the most popular types of payment security.
Types of payment security
While the full list of payment security types is quite large, we will go through some of the most common ones you can encounter. Keep in mind that some of these types are used on their own, while others are used usually in combination with others.
The logic behind using multiple types of payment security is simple - the more the better.
The absolute necessity of every secure transaction is the utilization of encryption protocols. They protect customer data, starting from basic information such as username up to credit card details, date of birth, and any other info they may have left. Encrypted data can be hardly accessed, tampered with, or stolen.
The two primary encryption types are symmetric and asymmetric, and they both ensure high levels of security. Although they both have their strengths and weaknesses, both symmetric and asymmetric encryption are used for online transactions. However, asymmetric encryption is generally considered more secure.
To encrypt the data transmission between customers and their websites, e-commerce businesses use encryption protocols such as Secure Sockets Layer and Transport Layer Security. Strong algorithms, up-to-date protocols, and secure storage are key traits of ensuring the safety of user data.
Websites that don’t utilize SSL or TLS suffer from worse placement on search engines as well and have lower profits. Customers can quickly check the status of a web page by checking whether the browser shows a padlock symbol left of the URL bar. It’s highly advised against leaving personal, let alone financial data, on websites that don’t have secure connections.
Just like encryption, this is a method of making the financial data that’s transmitted unreadable by anyone who might have been observing the traffic. This happens by replacing sensitive information with unique tokens that are only readable by a payment processor.
If hackers steal or get to the data, then they wouldn’t be able to steal anything valuable. This process ensures that the payments flow according to financial laws and regulations, and that user data is protected.
Tokenization is designed to be a one-way and irreversible process. Without access to the tokenization system's database, the data can’t be returned to its original form.
While they are similar in their core, tokenization is more secure than encryption, as it creates an irreversible token. On the other hand, hackers might access encryption keys and use them to decrypt sensitive information.
3. Fraud detection and prevention
Besides making transaction data more secure in various ways, there are other ways of making transactions more secure. With online fraud, it’s better to be safe than sorry, and you should do what’s in your power to minimize the chances of fraudulent transactions happening.
One of the best ways to do this is by using third-party fraud detection and prevention software. This type of service uses sophisticated methods to detect fraudulent activities, which can then help you to manually or automatically suspend those customers.
Fraud detection practices rely on data analysis. This software analyzes millions of fraudulent activities and transactions and then makes predictions about what behavior is suspicious.
Payment security for crypto payments
Since Bitcoin’s whitepaper was released around fifteen years ago, businesses have noticed the positive aspects of blockchain technology and decided to allow crypto payments. They experienced even larger adoption rates in the past couple of years along with the last bull market.
However, even though blockchain ensures transaction anonymity and speed, there are still laws and regulations you need to adhere to. You can use a crypto tax compliance platform to understand whether you’re operating correctly.
Whether you’re using cryptocurrencies to pay your employees or to facilitate the purchases made by your customers, it’s important to ensure maximal safety and compliance with regulations.
Types of payment gateways
Payment gateways are usually built-in and you don’t have to fiddle around their technical aspects to implement them on your online store. They usually come along with the e-commerce platform of your choice or are installed through a wizard.
1. Local bank integration
The process that customer experiences with local bank integration is similar to a hosted gateway. However, instead of a straightforward third-party form that hosted gateways such as PayPal have, the customers are redirected toward another screen that requires their contact and payment information.
This type of payment gateway is easy to set up, yet it isn’t considered the most attractive or desirable. You can learn more about this and other types of payment gateways if you’re looking to ensure that you’re making the right choice.
The important downside of local bank integration is that it’s harder to conduct refunds or repeated payments. This can be repelling for customers.
2. API-hosted gateway
For e-commerce business owners who are a little more tech-savvy, API-hosted gateways are some of the best choices out there. API gateways are applications that allow storeowners to customize them however they like.
They can be used for personalizing the experience for customers and making better-designed checkouts. However, the downside is that the businesses are responsible for the process of ensuring the security of transactions.
This can be costly in the long run, if an unlucky situation happens or if the business scales.
3. Hosted payment gateway
Hosted gateways are common among online stores as they are easy to implement. With them, website owners don’t have to waste time around checking and integrating payment gateway. Once a customer clicks on the checkout, they are directed toward another website.
They are redirected to the payment service provider, which is usually a reputable company in the industry. The most popular and common hosted payment gateway that you can integrate is PayPal.
Cybersecurity measures are crucial for online transactions
Whether you’re allowing your customers to use vouchers, credit cards, or cryptocurrencies, cybersecurity is a crucial part of ensuring the safety of your customers and your company. Although some payment security methods are implemented by default if you’re using e-commerce platforms such as Shopify, it’s best to go a step further.
Furthermore, understanding the types of payment gateways helps business owners understand the weak points of the payment process and see what cybersecurity measures they can add.