First Line of Defense: Modern Payment Methods and their (Security) Perks

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First Line of Defense
  Your regular source of security updates from TrendLabs
  October 11, 2015   Follow

Modern Payment Methods and their (Security) Perks

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U.S. merchants reached their deadline to switch to EMV technology this October 1. This signifies the paradigm shift from the old payment method where consumers used plastic cards with magnetic stripes to more advanced and more secure ways of making cashless transactions.

It’s been almost 50 years since MasterCard® released the very first credit card payment system in the US. Soon, the world followed in storing credits conveniently in these plastic cards with magnetic stripes as another alternative to having cash on hand. It was the ideal way of carrying huge sums of money. However, this payment system isn’t as secure as it was before.

  " With the rise of e-commerce came new technologies that can exploit systems or technologies in order to steal user credentials."  
With the rise of e-commerce came new technologies that can exploit systems or technologies in order to steal user credentials or credit card details. For instance, PoS networks in retail stores can be tampered to collect the user’s card data. Cybercriminals also use malware and affect financial institutions to steal credit card information. Some resorted to phishing methods to get users to divulge account details. Consequences for these attacks lead to credit card counterfeiting, where the stolen information are used by cybercriminals to replicate credit cards. The stolen information can also be sold in the deep web.

While credit card companies create policies to help protect their customers from unfortunate incidents, the actions taken are reactive in nature. For example, after a stolen credit card’s information was wrongfully used, the customer then would fill out forms declaring that their card was used without their permission.

Fortunately, more secure ways of handling credit are available today and they’re even easier to use than their predecessors. And even though these systems aren’t perfected yet, they are leaps ahead in terms of security.

EMW Credit Card, also known as the Chip-and-PIN card, features a chip that stores a cryptogram. Said cryptogram helps banks detect if the card or any transaction has been altered. It also stores a transaction counter that prevents fraudulent activities. Contactless RFID Cards rely on radio-frequency identification in making secure payments. With this, users can say goodbye to the traditional card swiping and simply wave the card in front of contactless payment terminals during transactions. Mobile Wallets have been with us since 2004 but is gaining much popularity through mainstream platforms such as Google Wallet and Apple Pay.

Another way of securing these mobile modes of payment is the creation of New Payment Processing Architecture. Examples of these are Encryption Plus Tokenization, Cloud PoS Systems, and Secure Element System.

Since the United States gave all merchants until October 1, 2015 to switch to the EMV payment system, shoppers who are still using old payment methods should check with their banks how to avail of the new card. Users may also seek other alternatives to cashless payments.

Some of these methods may not be as widely available as the plastic card system majority of us use today, but the same can be said about the automated systems nearly 50 years ago. As more users switch to safer and more secure ways of transacting, financial entities are sure to follow. To learn more about these next-generation payment methods, read our article Next-Gen Payment Processing Technologies: What They Are, and How They Work.


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