What Are the Threats to Payment Gateways?

What are Payment Gateways?

A payment gateway is a technology that authorises and directs transactions between a merchant’s website and its acquiring bank or payment processor. It allows merchants to accept online payments using various payment methods, such as credit cards, debit cards, net banking, UPI, EMI, Wallet, etc. 

Payment gateways eliminate the need for merchants to store sensitive card details on their servers by transmitting transaction details securely to payment processors. As consumers increasingly rely on digital payments, they are vital to e-commerce, mobile apps, and even traditional retail.

How does the Payment Gateway Work?

When a customer checks out on a merchant’s website to make a purchase, the payment details are sent to the payment gateway through a secure connection. The gateway then communicates with the payment processor or acquiring bank to authorise the transaction. 

If authorised, the gateway will redirect the customer back to the merchant’s site with a transaction approval message. It also transfers funds from the customer’s account to the merchant’s account according to the terms set up with the merchant and processor. The whole process takes place within a few seconds, allowing customers to complete purchases online seamlessly.

Payment Gateway vs Payment Processor:

A payment gateway is a system that connects online merchants to banks and payment processors. It facilitates the transfer of payment information from customers to payment processors and allows merchants to accept credit card payments on their websites. 

A payment processor is a company that authorises, processes and settles payment transactions on behalf of merchants. Processors handle the technical details of payment processing and ensure a smooth transfer of funds between merchants and card issuers. While gateways focus on payment integration, processors handle the actual transfer of funds and the security aspects of transactions.

Threats To Payment Gateways:

While payment gateways offer convenience, they are also vulnerable to numerous threats. Understanding these threats is essential for businesses aiming to protect their transactions and customer data.

1) Data Breaches and Cyberattacks:

Payment gateways process sensitive financial information, making them a prime target for hackers. When not sufficiently protected, cyberattacks may result in data breaches that compromise consumers’ personal and financial information. 

Hackers aim to infiltrate gateway systems and exploit vulnerabilities to access and extract lucrative troves of private customer data. According to Verizon’s 2021 Data Breach Investigations Report, insider threats accounted for 29% of security incidents.

2) Man-in-the-Middle (MITM) Attacks:

In a man-in-the-middle attack, an unauthorised party secretly intercepts and manipulates communication between two genuine parties who believe they are directly communicating. In the case of payment gateways, an MITM attacker positioned between the user and the gateway could intercept payment information and redirect transactions without the knowledge of the legitimate parties.

3) Denial-of-Service (DoS) Attacks:

Denial-of-service attacks generate an enormous amount of traffic and requests and have the potential to overwhelm payment gateway infrastructure and stop processing. While temporary, such attacks threaten the smooth functioning of commerce and risk inconveniencing customers during checkout. Maintaining performance under extreme load presents an ongoing challenge.

4) Phishing and Social Engineering Attacks:

Phishing and social engineering aim to steal users’ sensitive payment data through deception. Fraudsters craft emails and websites that impersonate legitimate payment portals to trick users into revealing their login credentials and financial details. Once stolen login and card numbers are in hand, damage can be done far and wide before their deception is uncovered.

5) Malware Infections:

Malware infections pose a constant threat to payment gateways. Viruses and malicious software can infiltrate gateway systems and servers, accessing sensitive financial data and monitoring transactions. Once embedded, malware is difficult to detect and remove, putting customer payment details at risk of theft and misuse over extended periods.

6) Account takeover attacks:

Account takeover attacks are concerning as they allow unauthorised access to payment accounts. Hackers can utilise personal details obtained through data breaches to impersonate legitimate users on payment sites. Once gained, this access enables transactions without the owner’s consent or knowledge. It’s unsettling to consider the possible misuse of personal financial information.

7) API and 3rd Party vulnerabilities: 

Payment gateways rely on APIs and third parties to process transactions. Any weaknesses in an API’s design or a third party’s security practices present opportunities for hackers. If vulnerabilities are exploited, sensitive financial data could be at risk. Gateways and their partners need to be vigilant about potential dangers.

Protecting Against Payment Gateway Threats:

1) Tokenisation and Encryption:

Tokenisation and encryption are essential processes used by payment gateways. Tokenisation replaces sensitive data with unique identifiers, while encryption scrambles data using algorithms. Together, these tools help address security concerns when handling financial transactions online.

2) Multi-Factor Authentication (MFA):

Multi-factor authentication adds an extra layer of security verification beyond a password. When accessing payment accounts, implementing authentication methods that require more than one type of information can help confirm that users are who they say they are.

3) Compliance with Industry Standards:

PCI DSS provides guidelines for securely processing, storing, and transmitting cardholder data. Strict adherence to PCI’s best practices, such as regular audits, access controls, and encryption, shows a merchant’s commitment to customers’ security and privacy while handling their financial information.

4) Monitor for anomalies: 

It’s essential to pay attention to any transaction trends that look different from regular activity. Noting anomalies as soon as they happen means problems can be handled quickly. In real time, behavioural analytics helps detect suspicious login patterns, transaction locations, etc.

5) Educate merchants: 

Payment gateways should provide merchants with resources to increase their knowledge of security best practices, such as access controls, prompt patching, data encryption, etc., to reduce the risks they introduce. By arming merchants with information, they can make informed business decisions regarding payment processing on their own websites.

Securing Online Transactions With Ntt Data Payment Services India

NTT DATA Payment Services India offers a complete payment solution to advance your e-commerce and in-store businesses. From online payment gateway and POS to IVR payments and Bharat QR Scan and Pay, we ensure maximum convenience and safety for all your payments. 

Our payment services offer advanced security to address the threats to payment gateways. We comply with the highest standards and have a track record of zero unauthorised access incidents. NTT DATA Payment Services India helps merchants focus on their business with worry-free, secure payment processing.

Conclusion:

Payment gateways will remain prime targets for cybercriminals looking to steal funds or payment data. While gateways work hard to plug security gaps, the evolving nature of threats requires constant vigilance. As outlined above, adopting a robust, multi-layered security approach can help payment gateways and their merchant partners protect against payment data and systems threats.

FAQs

1) What is a payment gateway?

A payment gateway is a technology that authorises and directs transactions between a merchant’s website and its acquiring bank or payment processor.

2) What is the difference between a payment gateway and a payment processor?

A payment gateway connects online merchants to banks/processors, facilitating the transfer of payment information. A payment processor authorises, processes, and settles transactions on behalf of merchants. Gateways focus on integration, while processors handle actual fund transfers and security.

3) What are the main threats to payment gateways?

The main threats are data breaches/cyberattacks, man-in-the-middle attacks, denial of service attacks, phishing/social engineering, malware infections, account takeovers and vulnerabilities in APIs/third parties.

4) What is a man-in-the-middle attack?

An unauthorised third party secretly intercepts and manipulates communication between two parties who believe they are directly communicating with each other. In payment gateways, an attacker can intercept payment info and redirect transactions.

5)How can denial of service attacks be prevented?

Gateways need robust infrastructure that can handle extreme traffic loads without disruption. Maintaining high performance under DDoS attacks requires ongoing infrastructure enhancements.