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The cyber-threat landscape is complex and ever-evolving. The threat actors have become increasingly sophisticated, leveraging an array of intelligent digital tools to compromise systems, individuals and organisations. Financial institutions, financial services and fintech services are among the most targeted. Research has found that 71% of organisations have experienced payments fraud attacks, 30% of companies saw an increase in payments fraud in 2021, and these threats are increasing in intensity and capability. As David Avgi, CEO of UNIPaaS, points out, security is a critical component of any financial service, particularly embedded finance API security.
“While embedded finance solutions are still evolving and growing, they need to be secured at the foundational level to ensure that every corner is secured, every gap filled, and every vulnerability addressed. This is critical within the current landscape where threat actors use social engineering, stolen credentials, spoofing, phishing, artificial intelligence, and email to gain access,” he explains. “Any organisation that provides an embedded finance solution must prioritise security because the platforms, marketplaces, and SaaS companies that use these payment solutions want to know that their transactions and customers are as secure as possible.”
Embedded finance allows platforms and marketplaces to consolidate their payments and create holistic ecosystems that serve the best interests of their customers. Done right, embedded payments offer customers accessible, easy and agile payments services while providing platforms and marketplaces with the opportunity to cement customer trust, build new revenue streams and establish a solid reputation.
However, a company needs to provide rigorous and robust security to maintain customer trust and its reputation. The cyber-road is littered with the bones of those companies that closed their doors because a breach ended their business.
And this is not the road that platforms want to travel.
Embedded payments offer immense value to both those who provide them and those who use them. Platforms and marketplaces can use them to stop customers from being redirected to third-party websites and taken outside of their business, and this is immensely valuable as it reduces churn, increases stickiness and minimises customer admin. Customers benefit because they don’t need to juggle multiple websites, tabs and payment options, and because they can just live within one central space that gives them everything they need.
“It’s easy to see why embedded platform and marketplace payment solutions have become so popular,” says Avgi. “They make it easier for everyone to do business and, honestly, easy is always going to be a win for the stressed small business owner and the busy platform or marketplace.”
The embedded finance market is expected to exceed $183 billion by 2027 globally, according to Juniper Research, and this growth is largely expected to be driven by companies that are not traditionally in the payments space. Platforms, marketplaces, and other non-financial companies are radically adopting embedded finance to gain market traction and build customer ecosystems that generate revenue and growth. However, this popularity draws cybercriminals like the proverbial bees to honey, and this means security has to be an ongoing priority.”
“Security should not be tacked onto a solution; it should be embedded throughout,” says Avgi. “Think of it as a fabric with multiple security threads, each one woven through the solution to ensure that it is as robust as possible. When it comes to embedded finance solutions, this fabric needs to be as densely woven as possible - money will always be an attractive target for the cybercriminal.”
Beyond the loss of business, reputation, and money, there are three key reasons why it is essential to prioritise embedded finance security:
1. Risk will always follow finance. It is an attractive target. Platforms that remain focused on security, are always vigilant, pay attention to the risks and constantly educate and inform their customers are in a better position to recover from, or prevent, a potential breach.
2. Awareness builds resilience. Understanding the risks and planning for them ensures that your platform is compliant and ready to adapt to the ever-changing regulatory landscape with relative ease. When your systems are built for security, you are already ahead of the curve regarding legal and regulatory risk management.
3. Customer experiences remain frictionless and sticky. Security is more than a box-ticking exercise; it’s a trust exercise. Your customers can trust in your commitment to high-end security, making you a preferred space to conduct their business.
The statistics that follow security around the headlines are scary. Interpol’s Global Crime Trend report cited financial and cybercrimes as the top global police concerns. The World Economic Forum (WEF) has warned that online services and shopping are at extreme risk in the current landscape. A fact reinforced by PwC’s cybercrime report ‘Protecting the Perimeter’, which found that 46% of organisations have experienced fraud or economic crime over the past two years. It also found that digital platforms and e-commerce have opened the door to different types of attacks and fraud.
“The cybercrime market is only just beginning to dig into what it sees as a lucrative space,” says Avgi. “Platforms and marketplaces are under threat. They are ripe for the digital picking if they don’t ensure that their embedded payment solutions adhere to incredibly rigorous and up-to-date security standards.”
A trusted embedded payments solution needs to include the following essential security protocols, standards and processes:
3DS authentication uses the secure sockets layer (SSL) to add strong customer protections to all transactions. Customers are expected to follow a series of verification and authentication steps when they pay so that every transaction is verified and confirmed.
Know Your Customer (KYC), Know Your Business (KYB), and Anti Money Laundering (AML) checks should be seamlessly integrated into your embedded payments solution in a way that ensures it is easy for customers to flow through these checks, but that equally ensures every step is compliant and aligned with regulatory expectations.
PCI Security Standards Council Compliance that’s built on foundational security principles that are adhered to and developed by the payments industry. According to the Council, this standard's goal is ‘to develop and drive adoption of data security standards and resources for safe payments worldwide.’ PCI DSS Level 1 compliance is designed to reduce the risk of fraud and credit information theft by ensuring the secure processing of transactions.
PSD2 compliance ensures multi-factor authentication and should be implemented by companies or services that use or work with customer payment data or provide payment services.
“You want to know that these security protocols have been implemented as standard,” advises Avgi. “These are the gold standard benchmark of a trusted embedded payment solution that ensures customer and platform security is a priority. If your platform or marketplace has white-labelled a solution, then these should be part and parcel of the basic security package. However, a truly robust solution should include even more security functionality and should show platforms and marketplaces exactly how much work has been put into protecting them and their assets.”
The “UNIPaaS’ solution includes every one of the core security functionalities outlined above, and it is certified to the highest industry security standards to further drive home our commitment to customer peace of mind,” says Avgi. “We are regulated by the Financial Conduct Authority (FCA) as an Authorised Payment Institution and are a compliant PCI DSS service provider Level 1.”
UNIPaaS complies with PSD2 regulations, which ensures robust security while minimising the risks of non-compliance for platforms and marketplaces and handles all of the KYC, KYB and AML verification checks automatically. The platform provides intensely secure and seamless onboarding for platforms and marketplaces with minimal stress and maximised ease of use.
“We take care of compliance and security across all the key touchpoints so you can focus on growing your business stress-free,” concludes Avgi. “We constantly update our security, invest in compliance, remain ahead of regulatory and legal requirements, and ensure that our security is up-to-date and relevant. We believe that marketplaces and platforms need peace of mind to provide their customers with the best possible services and experiences. So we ensure that our security is exceptional.”
Find out more about embedded finance API security and how UNIPaaS can change your platform’s perceptions of embedded finance here.
UNIPaaS Financial Services Limited is regulated by the Financial Conduct Authority (FCA) as an Authorised Payment Institution (No. 929994). UNIPaaS is certified as PCI DSS service provider Level 1.
