How to Secure Transaction Code?

Wondering how to secure transaction code? 

You have come to the right place.

The world is witnessing a constantly increasing focus on cybersecurity. Governments, businesses, and non-governmental organizations are trying hard to protect the data of citizens, customers, and stakeholders, respectively.

Banks and financial services institutions are at the forefront of this effort, for obvious reasons given the nature of their business.

Are you a senior leader in such an organization? If you are then you are likely wondering how to secure transaction codes for your customers. Read on, as we explain exactly that.

What you should do to secure an online transaction in your bank or financial institution?

You can secure transaction codes in your banking or financial services institution using various means. However, you need to strategize first. As we explained in our guide to securing a FinTech app, your strategy should include the following:

• Securing the infrastructure used in your app;
• Mitigating application security risks;
• Baking in modern application security tools and techniques in your information security solution;
• Proactively include compliance and security testing in your project plan.

After crafting a robust strategy for your security interests, you need to implement it. Focus on the following technology solutions, approaches, and best practices:

1. A robust multi-factor authentication (MFA) solution

You must implement a robust password solution. This should include strong policies and password management. Having said that, you need more than just passwords in modern banks and financial services institutions. You need to include a stronger authentication solution.

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You might offer ATM cards, debit cards, and/or credit cards to consumers. Your customers use their PIN in conjunction with it. E.g., a consumer enters a credit card or debit card PIN on a POS (Point of Sale) terminal of a retailer.

You are likely offering Internet banking, mobile banking, etc. An account holder has their account number, and they might have a customer identifier. The account holder has a password for it.

That’s a good starting point, however, you need to go beyond this. You need to implement a “Multi-Factor Authentication” (MFA) solution. Let’s see the following examples of using MFA for secured transactions:

• A bank might require account holders to enter a “One Time Password” (OTP) while logging in, in addition to the password. Both the website and the mobile app of the bank can have this requirement.
• The bank might require account holders to enter an OTP while executing a transaction involving electronic fund transfer.
• The card issuer bank might require a credit card holder to enter an OTP during an online purchase. Different credit card companies might have different names for this feature. E.g., MasterCard calls this feature the “MasterCard SecureCode”.

The bank registers the mobile phone number of an account holder. It also registers the email address of the account holder. The bank sends the OTP in an SMS to the mobile phone of the account holder, who can then authenticate herself. The credit card-issuing bank follows the same process for credit cardholders.

2. Credit card security using CVV code as used by providers like Visa, MasterCard, etc.  

If you are a credit card-issuing bank, then you should use a CVV or CVV2 code. Popular credit card providers like Visa, MasterCard, and American Express use this effective security solution.

CVV (Card Verification Value) is an authentication system that helps to prevent fraud in eCommerce transactions.

Note that people also use the following terms instead of CVV or CVV2:

• Card Security Code (CSC);
• Card Verification Data (CVD);
• Card Verification Value Code (CVVC);
• Verification Code (V-Code or V Code);
• Card Code Verification (CCV).

In the case of Visa or MasterCard, the CVV code is printed at the back of the card. It’s a 3-digit number. American Express cards display a 4-digit CVV code at the front.

How does it help? Suppose you plan to buy merchandise from an online merchant. How can the credit card company know that you are indeed the authorized user of the card? After all, incidents of data breaches are too common. A cybercriminal might have gotten your credit card number.

That’s where the CVV/CVV2 code comes into play. While online merchants can store your credit card number, they can’t store the CVV code. Cybercriminals that have your card number can’t have your CVV code.

By entering the CVV during the eCommerce transaction, online shoppers prove that they have the card.

3. An EMV chip card: A robust solution to protect the interest of the credit card holder

EMV is a security standard to store the account information on the card securely. The abbreviation stands for “Europay, MasterCard, and Visa”, the 3 companies that collaborated to create this technology solution. 

Credit card companies traditionally use the well-known magnetic stripe to store information concerning a credit card account. EMV chip cards offer more security though.

Organized criminal gangs often use “fake” credit card readers to capture sensitive information on the credit card. They then use it to execute fraudulent transactions. They can’t gather this information from EMV chip cards though, which makes EMV chip cards more secure.

There are two ways to implement the EMV chip card technology. One of them uses the combination of the chip and the PIN, and the other uses the chip and a signature.

4. Using technology solutions like 3-D Secure

3D-Secure has emerged as an important technology solution for payment fraud protection. Citibank, Visa, MasterCard, etc., use this useful technology.

The 3D-Secure solution requires a cardholder to complete an additional verification step with the card-issuing bank. Only the verified cardholders can complete their transaction.

The bank typically directs the customer to an authentication page on its website. Customers need to enter a password or a code that’s sent to their phone. Credit card companies might use a different name for this additional authentication functionality, e.g., “Visa Secure”, “MasterCard Identity Check”, etc.      

5. Robust encryption solutions

Banks and financial services institutions need to use strong encryption. We can’t overstate the importance of encryption in the modern era of banking and financial services. Data security-related regulations hold encryption as an important requirement.

Banks and financial services institutions must encrypt data-at-rest and data-in-transit. There are various encryption solutions and algorithms in the market, however, we recommend you use AES-256 encryption. It’s military-grade encryption. Hackers can’t crack this encryption with the computing resources commercially available today. 

6. Using AI (Artificial Intelligence) and ML (Machine Learning) for fraud detection, cybersecurity, etc.

Banks and financial services institutions are increasingly utilizing AI and ML for fraud detection and preventing fraudulent transactions. AI and ML solutions also help banks and financial institutions to prevent cyber-attacks. You can also use these solutions in your organization.

These could include the following:

• Using analytics to prevent fraudulent chargebacks;
• Building Artificial Neural Network (ANN)-based behavior models for fraud detection;
• Developing AI-based anomaly detection to identify potentially fraudulent transactions;
• Real-time fraud detection with the help of AI;
• Utilizing ML and AI algorithms to scan the environment for emerging cybersecurity threats;
• Preventing cyber-attacks with the help of AI/ML tools.

Note that developing the appropriate AI and ML algorithms for this can take significant time and effort. AI and ML are niche skills. You need competent Python developers with years of experience in developing ML/AI algorithms.

7. Using next-generation firewalls and robust antivirus solutions

When a bank or financial institution tries to secure a transaction code, they must contend with cyber-attackers prowling around. Organized gangs of hackers are always looking for a foothold in the networks of banks and financial services institutions.

Modern firewall solutions can help banks and financial institutions to keep hackers away from their networks. Cyber-criminals routinely use computer viruses and malware to compromise information systems, and you need a robust antivirus solution to mitigate such risks.

8. Adopting the right software development and testing practices

Banks and financial institutions process sensitive personal information like social security numbers, bank account numbers, etc. This makes them prime targets for hackers.

Hackers look for bugs in information systems. They try to compromise software systems by exploiting these bugs. You need to prevent defects when you build banking or financial services apps. Do the following:

• Mitigate the key application security risks like injection, broken authentication, XML external entities (XXE), etc., proactively.
• Use the right technology stack. E.g., consider developing native mobile apps if you plan to offer mobile apps. Native mobile apps use programming languages like Java for Android and Swift for iOS. These languages are well-known for supporting secure programming practices, therefore, native apps are more secure than hybrid apps.
• Secure APIs by using encryption, digital signatures, gateways, etc., as we explained in our RESTful API development guide.

Ready to Secure Transaction Code?

The importance of securing financial transactions can’t be overstated. If you are an IT leader in the banking and financial services sector, you need to strategize effectively before implementing an effective security solution.

Use appropriate technology, infrastructure, processes, and methods to secure a transaction code in your financial institution. Contact as at DevTeam.Space if you need help.

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