Cybersecurity and payments: why you should protect your marketplace

As e-commerce grows at breakneck speed, the cybersecurity for online payment methods is becoming a major concern. As the volume of online transactions increases, so do the risks associated with cybersecurity, such as fraud, identity theft, ransomware attacks, and business interruption. For marketplaces that generate thousands or even millions of transactions every day, it is imperative to strengthen their security measures. This is essential not only to ensure user trust but also to ensure the long-term future of the platform.

Marketplace cybersecurity: context and threats

In recent years, marketplaces have faced increasing cybersecurity threats and incidents. Marketplaces are becoming prime targets due to their nature and the volume of transactions they handle. According to IBM’s 2022 Annual Report, the average cost of a data breach is now $4.35 million. E-commerce fraud losses are expected to reach $50 billion globally by 2023.

The most common threats

When it comes to making payments on marketplaces, several cyber threats require special vigilance:

• Credit card fraud: Fraudsters use stolen credit cards to make purchases. Fraudsters generally gain illegal access to this information through hacking, phishing, or cloning.
• Fake consultant fraud: Individuals pose as legitimate consultants to obtain sensitive information, obtain 3DS validation for fraudulent payments, or commit fraudulent acts.
• Brute force attack: Hackers attempt to guess login credentials by trying different combinations of usernames and passwords.
• Customer information theft: Cybercriminals gain access to personal data and credit information, putting users at risk of identity theft and financial loss.
• Denial of service attacks (DDoS): Attackers can overload marketplace servers with malicious traffic, disrupting or even shutting down service.
• Supply chain compromise: where cybercriminals target marketplace partners to infiltrate marketplace networks.
• Weak application security: Vulnerabilities in marketplace application code are exploited by cybercriminals to gain access to data or take control of systems.

Furthermore attacks are becoming more sophisticated and challenging to detect due to cybercriminals’ use of artificial intelligence.

The impact of these incidents

When they occur, cybersecurity incidents on marketplaces significantly impact the platform and its sellers and buyers.

• Loss of customer trust and loyalty: A cybersecurity incident, such as a data breach, can profoundly undermine customer trust in a marketplace and its sellers. This mistrust often leads to a decrease in customer loyalty, as customers turn to competitors who are perceived to be more secure.
• Damaged reputation and brand image: The consequences of a security breach affect the marketplace’s reputation and can tarnish the platform’s public image. A tarnished reputation is difficult and costly to repair and can discourage new users from registering, using services, or making purchases.
• Loss of revenue for the marketplace and its sellers: Cybersecurity incidents often result in a direct loss of revenue for marketplaces. Reduced traffic, cancelled orders, and the flight of loyal customers all result in an immediate loss of income. This loss of revenue can be compounded by the costs associated with managing the incident. Marketplace sellers also suffer the consequences of a cybersecurity incident. Reduced customer confidence and traffic, as well as business interruption can lead to a decrease in their sales and, therefore, their revenue.
• Legal implications: Data breaches and other security incidents can have serious legal consequences for the marketplace and vendors. Companies could face significant fines, not to mention the costs associated with legal action and compensating affected customers.

Regulatory issues

Regulatory issues related to payment security on marketplaces are becoming increasingly important, especially with the adoption of directives such as PSD2 (Payment Services Directive 2), which will evolve into PSD3 in Europe. These regulatory frameworks aim to strengthen the security of online transactions and protect consumers from fraud. For example, PSD2 introduced strict requirements for strong authentication (SCA), requiring marketplaces that process payment transactions themselves to implement more robust identity verification procedures for payments. Anti-money laundering and countering the financing of terrorism (AML/CFT) obligations also require these platforms to implement effective systems to monitor, detect and report suspicious activity. These regulations require constant vigilance and regular updating of security systems. Quite simply, marketplace compliance is at stake.

How can you protect your marketplace?

Ensure the basics of payment protection

Each payment method presents specific risks to users and marketplaces. For example, card payments are vulnerable to data breaches and unauthorized transactions, while e-wallets and mobile payments are vulnerable to malware and phishing. To mitigate these risks, strong measures must be in place to protect payments:

• PCI DSS compliance is critical for any organization that processes bank card data. It guarantees the implementation of robust security measures to protect the information of all players in the electronic payment chain.
• Know Your Customer (KYC) procedures are essential to identify the beneficaries of funds and control the risk of money laundering and terrorist financing.
• Data encryption protects personal and financial information during transactions.
• Strong authentication minimizes the risk of fraud by verifying and validating the identity of users before authorizing transactions, thereby reducing the risk of unauthorized access (non-repudiation).
• Tokenization replaces sensitive data with a unique identifier that cannot be exploited.
• The 3DSv2 improves the security of online payments while providing a better user experience.

Adopt an effective cybersecurity strategy

In addition to fundamental security measures, a robust cybersecurity strategy is required to ensure complete and lasting protection.

1. Integrate advanced security solutions, such as anti-fraud systems, to detect and neutralize threats before they affect users.
2. Implement real-time monitoring of platform activity through a monitoring dashboard to quickly identify suspicious behaviour and effectively intervene.
3. Be ready to respond in the event of a breach or attack. Not only do you need to react quickly to minimize damage, but you also need to maintain business continuity. This requires well-designed incident response plans and disaster recovery procedures.
4. Ensure a smooth and secure payment experience. This means balancing stringent security measures with an intuitive and fast user interface, so as not to discourage legitimate purchases.
5. Educate buyers and sellers about cybersecurity risks and best practices to make them less vulnerable to attack and more alert to anomalies.
6. Improve dispute management to increase user trust. This includes securing deliveries, providing responsive customer service, improving refund processes, and ensuring transparency in the payment process.

Together, these measures form a solid framework for an effective cybersecurity strategy that protects the interests of users, sellers, and the marketplace.

The importance of choosing reliable partners

Special attention must also be paid to the security measures taken by service providers, especially those involved in the management of payments, such as Payment Service Providers (PSPs). These partners play a crucial role in ensuring the security of financial transactions. It is important to ensure that they adhere to the highest security standards and use the latest technologies to protect customer data from threats. Choosing reputable and reliable partners means aligning yourself with companies that understand the importance of security and are actively committed to preventing fraud and providing a safe payment environment.

By integrating cutting-edge technologies for verification (such as OCR and instant KYC), encryption and authentication (such as 2FA), Lemonway improves payment control and reduces the risk of fraud. Since 2012, Lemonway has secured the funds of hundreds of platforms thanks to its innovative and secure approach. The data is stored in France, in PCI DSS-compliant data centres. The Lemonway ecosystem also offers detailed access to transaction information and the ability to configure targeted alerts better to detect suspicious activity. In the event of fraud, our teams work closely with marketplaces to provide advice.

Want to know more about Lemonway? Contact our experts!