We all know that online and digital banking systems offer unparalleled convenience and speed. However, this convenience comes at a cost. A poor implementation of modern technologies leaves money and data susceptible to online theft and hacks. Studies show that online banking accounted for 33% of U.S. banks’ fraud costs in 2021. Hence, advanced banking systems require equally modern security technologies to protect pertinent data and money. In a previous blog, we discussed fraud detection and prevention for faster payment systems. This blog discusses biometric authentication and check verification for financial institutions and corporates to safeguard their payment processes further.
Biometric authentication technologies, aka biometrics, are technologies that rely on the unique biological characteristics of individuals to verify their identity. In simpler terms, biometrics use a person’s physical features, such as fingerprints, face ID, iris recognition, etc., to recognize them and perform sensitive functions. Examples of biometric authentication technologies:
Software providers often develop applications that rely on biometric authentication for banking and payments functions like:
Biometric authentication is often considered safer than the conventional username-password combo because biometrics are infinitely harder to hack and cannot be replicated easily.
Fingerprint scanning and iris scanning are the most popular methods of biometric authentication. Face recognition has surprisingly gained much traction with the new iPhone Face ID technology. As hackers developed advanced means of creating and replicating synthetic identities that mimic individuals, cybersecurity developers found ways to fortify biometric functions further.
Today, biometrics are commonly used with username-password combos to enhance the security of sensitive functions. Most hi-tech banking and payment applications require the user to authorize a function twice. Once with a username-password, and a second time with biometrics. Security measures that require the user to authenticate with a username-password combo AND a one-time password, biometric authentication, or an app-based login are known as two-factor authentication (2FA) methods.
The first commercially available biometric technologies were available in the late 1960s. However, they were costly, not very accurate, and accessible only to large corporations. We can trace the large-scale commercial adoption of biometrics back to the fifth-generation iPhones launched in 2013. Today, most modern smartphones and laptops deploy some form of face ID or touch ID biometric authentication.
The evolution of mobile and digital banking has made sensitive banking and payment functions available at our fingertips with smartphones. So, ideally, every individual with a smartphone that stores confidential information such as bank details, customer identity details, payment authorizations, etc., should leverage biometrics. Additionally, the following cases should leverage advanced biometric technologies without fail:
The combination of biometric technologies with conventional username-password security is extremely difficult to hack and misuse.
Banks use technologies such as fingerprint scanning and face ID to tokenize the login information of their customers. With advanced biometrics, customers quickly log in to their banking applications without entering their username-password every time.
eSigning documents with biometric authentication reduces paperwork and increases the security of banking processes.
Banks and other financial institutions streamline new customer onboarding processes with modern biometric-enabled KYC to auto-fill customer details on new loan applications and bank account forms.
Banks offer the convenience of on-the-go mobile banking securely with biometric authentication.
Now that we have understood the basics of biometric authentication, let’s consider check verification, which is another vital payment security measure for financial institutions and banks.
Check verification is the practice of verifying the validity of a presented check/draft or the history of the account holder, or both. Check verification technologies essentially verify checks to prevent fake checks and fraudulent transactions before actually processing the check. This technology helps the merchant validate an account, if it is real or not, and also verifies if the said account belongs to the check writer. It curbs the fake check scam for both virtual and paper checks. Here’s a brief on how these technologies work.
More advanced check verification tools also use private bad data list checks, client and organization identity check, and negative data check to curb fraud further while receiving and sending money.
Most large financial institutions use check verification systems with complementary bank account verification technologies to process funds seamlessly. Additionally, National Automated Clearing House Association (Nacha) recommends the use of some of the following account validation methods to validate first-use consumer account information:
Nacha has also created a list of Nacha Preferred and Certified Partners that offer account validation services.
Ideally, all members/users of the automated clearing house (ACH) network should use check verification technologies to prevent fraud. The following users benefit the most from such technologies:
Learn more about the essential components of check verification systems.
Organizations that deploy check verification tools readily accept checks without the fear of fraud. The best tools have tie-ups with financial institutions to update their negative-data database regularly, which helps with real-time fraud identification and prevention.
Merchants that accept payments via various payment methods actively capture a larger market than the ones that accept only credit cards or cash. While paper checks are almost out of fashion, they are still used for several B2B transactions. So, merchants that deal with industries that still heavily rely on check debit and ACH transactions should use these tools.
Identification of fake checks before processing them is the best way to prevent the costly check returned fees. Real-time identification of a phony check allows the vendors to request a different one or payment via an alternate payment method.
Most POS transactions are quick and happen within a few minutes. With real-time check verification, merchants verify checks and request an alternative payment method if needed within seconds. Such a fast service helps them maintain excellent turnaround times without compromising the customer’s payment and shopping experience.
Use tools that help you identify the check’s validity and the check writer’s historical status. These tools help you identify repeat offenders before processing their checks.
While adopting check verification systems, you should also consider the following secure payment technologies to accept online payments safely.
The most advanced hosted payment portals help you collect payments online with various payment methods like ACH, debit cards, and credit cards. PCI-compliant hosted payment portals ensure that no sensitive customer banking information stays on your systems after the customer completes the initial transaction. Moreover, the top payment processors design custom payment portals that mimic your website to offer a seamless shopping experience.
PCI-compliant iFrame modifies a small part of your website to collect relevant payment details from your customers. This technology reduces your liability for payment transactions since all payment details go through the payment processor’s secure site.
Tokenization and encryption help you offer a seamless shopping experience with one-click payments for recurring customers. Learn more about tokenization and encryption.
You should consider the following factors while choosing a payment processing partner:
The best payment processors go the extra mile to offer unparalleled security and customization to their clients. We serve large corporations and small teams with innovative payment solutions to streamline payment acceptance processes. Speak with our relationship managers today to identify the best fit technologies for your industry.