Remember the days when sending funds around the world involved a camel caravan or a weeks-long bank transfer?
Fast forward to modern times. Global payments are now, thankfully, nearly instantaneous.
However, the speed and convenience we now enjoy come with trade-offs, including a range of security risks, from fraud to data breaches and beyond.
Thankfully, APIs (application programming interfaces) are here to enhance cross-border payment security. These digital bridges between software systems simplify the exchange of data and complex transactions, while also bolstering security across the board.
In this article, we’ll explore the risks digital global transactions face, and how API-powered solutions are stepping in to reduce risk and simplify payment processes for businesses everywhere.
The Threats of Cross-Border Payments
Thanks to advances in technology, making financial transactions across borders has become a lot simpler—but it’s not without its dangers.
Cybercriminals tend to target cross-border payments because the process is often complicated and hard to track. Plus, there’s no universal set of rules for these transactions: each country has its own banking regulations, adding up to around 26,000 rules worldwide.
With no single authority overseeing these transactions, businesses and individuals face the following risks when sending money abroad.
Fraud
Fraud in cross-border payments happens when someone steals money through fake transactions or misleading information.
The consequences? Financial losses, damage to a company’s reputation, and potential legal headaches.
Fraud can take on a few different forms.
Account Takeover (ATO) Fraud
ATO happens when a cybercriminal uses stolen login details to take control of a legitimate account, like a bank or email account. Once they’re in, they can start making fraudulent payments or steal funds.
As an example, a hacker could access an employee’s email and send a fake payment request to the finance team, pretending to be that employee. Believing it’s legitimate, an accountant processes the payment—only for the money to end up in the hacker’s account.
ATO is a considerable threat, as fraudsters use a trusted identity to slip past security measures, making unauthorized transactions harder to detect.
Transaction Fraud
Simply put, fraudulent transactions appear legitimate because the request looks like it’s coming from an official-looking or trusted source.
Ultimately, the goal is to trick businesses or individuals into making payments for non-existent goods or services, refunding overpaid amounts, or redirecting funds to fake accounts.
For example, a business might receive a document that looks like an official confirmation from a bank, claiming that an international payment has been processed. The business then proceeds with shipping goods or providing services, despite no payment ever going through.
This type of fraud is particularly dangerous because it relies on exploiting the trust businesses place in what seems like genuine transactions.
Synthetic Identity Fraud
This type of fraud occurs when bad actors create fake identities using a mix of real and fabricated information, often to open accounts or commit illegal cross-border transactions.
As one potential scenario, a fraudster creates a synthetic identity by combining a real person’s Social Security number with a fake name and address. They then open an account with a payment service using their new identity—and initiate cross-border transfers under that name.
Because the person’s identity is partly real, this can make fraud harder to detect.
Data Breaches
Cross-border payments require sharing confidential information like names, addresses, and bank account details—making them prime targets for data breaches.
Hackers steal this information to commit fraud, putting businesses double at risk: the real losses they can suffer, and for failing to comply with security regulations.
Criminals use different methods to cause data breaches.
Man-in-the-Middle (MITM) Attacks
In an MITM attack, a hacker secretly interrupts communications between two parties during a cross-border payment.
In this scenario, the cybercriminal may intercept the exchange of payment details between a bank and its payment processor. By altering the recipient’s bank account details, the hacker can redirect information to use to their advantage. Meanwhile, the business remains unaware, believing that the sensitive information is secure.
MITM attacks are particularly dangerous because they exploit users’ reliance on secure communication channels—leaving businesses vulnerable to significant financial losses without any immediate signs of fraud.
Social Engineering
Social engineering involves attackers manipulating people into sharing sensitive information, often posing as someone else to gain trust and infiltrate a company’s network.
Victims unknowingly click harmful links or download infected attachments, and hackers gain access to valuable information.
Phishing is perhaps the most common social engineering tactic, where attackers pose as reputable organizations or people, using convincing-looking emails or websites to steal personal information.
However, there are many other social engineering tactics, including whaling, tailgating, and baiting.
Insider Threats
Insider threats occur when people within an organization misuse their access to financial systems—whether intentionally or unintentionally—to steal sensitive data, redirect payments, alter amounts, or even help launder money.
For example, an employee at a global payments company might wittingly team up with an external fraudster. Using their inside access, they share sensitive information about the company or its clients with the hacker. They can then use that information for their own benefit, or even sell it. Since security checks are bypassed, the scam goes unnoticed.
These threats are particularly dangerous because they exploit gaps in security, slipping under the radar of a company’s usual protective measures.
Interception and Tampering
Because cross-border payments usually involve numerous intermediaries, this opens up multiple points where cybercriminals could interfere with or alter transactions.
Moreover, the complexity of these systems makes it difficult to detect and reverse such activities, increasing both the risk and the financial impact.
This can happen in a number of ways.
Payment Redirects
In a payment redirect, a cybercriminal intercepts a legitimate cross-border payment and modifies the recipient’s account details to reroute the funds to their own account.
As an example, a company might receive an email that looks like it’s from one of their regular suppliers, asking for a payment to a new account. While the email includes the usual branding and signatures, it’s actually a scam—and the company ends up sending the funds to the fraudster, not the supplier.
Payment Message Tampering
Payment message tampering occurs when hackers intercept and modify the payment instructions during transmission between systems.
Here’s a potential scenario: A bank receives a legitimate cross-border payment instruction from a client, directing funds to a business partner in another country. However, hackers intercept the payment as it moves between systems, altering the recipient’s account details.
While it appears the payment is going to the right destination, it’s actually redirected to the fraudster’s account.
Replay Attacks
In a replay attack, bad actors capture real payment transactions and resend them to the original system, triggering duplicate payments or unauthorized transactions.
For example, let’s say a company makes a successful payment to a vendor in another country and a hacker captures the details of this transaction as it’s being processed. Later, the hacker “replays” the same payment instructions to the payment system, causing the system to process the transaction again.
The payment is duplicated without the company’s knowledge, and the fraudster takes the second payment.
Supply Chain Vulnerabilities
As cross-border payments pass through various systems and networks, each touchpoint becomes a possible target for cyberattacks.
That’s because, with so many different parties involved, it can be challenging to keep security measures aligned—leaving some areas across a transaction unprotected.
Once the weakest link in the chain is compromised, the whole payment process is the target. Weaknesses in a supply chain include:
Legacy Systems
Financial institutions that rely on outdated systems can become weak points in the payment supply chain.
These older systems often lack modern security features like encryption, fraud detection, and compliance protocols—making them more susceptible to breaches, data manipulation, and unauthorized transactions.
By continuing to work with partners who use legacy systems, financial institutions expose themselves, as well as their customers, to increased risk of financial loss.
Third-Party Risks
When working with a long line of partners, each party likely has its own security protocols, leading to inconsistencies across the entire transaction process.
These disparate security measures make it harder to maintain a consistent level of protection across the payment supply chain—increasing the risk of fraud, data theft, and transaction manipulation.
Discrepancies in standards can also hinder the detection of fraudulent activity, complicating efforts to maintain data integrity and protect financial transactions.
The Added Security of Payment APIs
Payment APIs play a crucial role in improving the security of cross-border payments.
As a single point of contact between multiple parties, APIs help to process global payments in a safe and standardized way.
With their robust features, APIs help protect sensitive financial data and reduce the risk of threats.
End-to-End Encryption
With APIs, data is encrypted from the moment it’s sent until it reaches its ultimate destination, even if it passes through multiple intermediaries.
This process ensures that confidential data stays secure throughout an entire cross-border transfer, preventing bad actors from intercepting or tampering with sensitive information.
Real-Time Fraud Detection
Payment APIs improve security in cross-border payments by offering companies real-time insights into their transactions—providing instant visibility on payments as they occur.
If fraud, a data breach, or any unusual transfer or unauthorized access is identified, APIs can send instant alerts. This adds an extra level of defense to international transactions, ensuring quick, automated actions to protect sensitive financial information.
Advanced Authentication
APIs work with multi-factor authentication (MFA) so that only authorized users can access sensitive accounts, reducing the risk of ATOs and identity fraud.
Additionally, APIs can tokenize sensitive data, i.e., replace information like credit card details with a unique, random string of characters called a “token.” Even if hackers intercept this token, it’s useless to them because they’re unable to trace it back to the original data.
This process adds an extra layer of security, making it harder for fraudsters to exploit the data if they somehow gain access.
Enhanced Transaction Integrity
APIs use extra security measures to ensure that data stays intact during transmission and that it’s coming from a trusted source.
First, message integrity checks help verify that data has not been altered while being sent. This process confirms that the message received is exactly the same as the message that was sent, with no alterations made along the way.
APIs also use digital signatures, which act like a security seal to validate that the message hasn’t been modified, and to certify the sender’s identity.
Centralization
APIs make cross-border payments more secure by bridging different systems together, simplifying complex processes while maintaining high-security standards and reducing vulnerabilities.
By enabling secure connections between systems like correspondent or partner banks, even when payment data passes through multiple parties, it stays protected.
Keeping Cross-Border Payments Secure and Fast
While payment APIs are great for boosting security, having more of them within a global payments system doesn’t always mean better protection.
In fact, using just one API can provide stronger security. Here’s why:
- Streamlined security: With just one API, the same safety measures are applied to all transactions, making it easier to keep everything secure. Conversely, when you use multiple APIs, each may have its own security protocols, creating potential vulnerabilities.
- Improved transparency and reporting: A one-API cross-border payment system provides access to data and reports in one place, making it simple to track and manage payments. In contrast, multiple APIs can lead to scattered data that’s harder to organize, making financial reporting more complicated.
- Simplified compliance: A single payment API ensures all compliance rules are standardized, making it easier to follow regulations—whereas with additional APIs, different compliance rules for each can create confusion and increase the risk of not meeting requirements.
This is where UniTeller’s secure payment solutions come in. By using just one API, we make cross-border payments simpler and safer, no matter which one of our solutions you use:
- UniTeller Cross-Border Pay, is a global payment gateway that streamlines remittances and business payments, by connecting various payment systems through one API for faster, more secure transactions.
- UniTeller Cross-Border Send offers a real-time solution for sending money globally with a single API, making it easy for businesses to handle P2P, B2C, and B2B payments.
- UniTeller Business Payments provides a payment gateway API for sending and receiving B2B, B2C, and C2B payments in multiple currencies, across over 80 countries.
Ultimately, UniTeller’s single API makes the global payment process a breeze by connecting all payment systems for easy and secure transactions. Meanwhile, advanced encryption and authentication further safeguard each payment from fraudsters and cybercriminals.
UniTeller Protects Your Global Transactions in a Complex World
At UniTeller, our mission is to empower global prosperity by providing seamless cross-border payments, and breaking down barriers to opportunity. We’re committed to ensuring that security never compromises these possibilities.
That’s why we prioritize a secure, transparent platform, backed by a singular payment API that makes managing international transactions more efficient and safe.
Given the complexity of modern global payments, safeguarding each transaction is more important than ever. With UniTeller, businesses can confidently process global payments without worry, allowing them to focus on growing their company.Explore our suite of single-API-powered solutions and experience the future of cross-border payments today.