Digital advancement is a double-edged sword.
While connecting the global economy, it has also unlocked the door to cybercrime.
Mirroring the laws of thermodynamics, every new digital convenience introduces an equal (and opposite) digital danger.
In this article, we will explore the landscape of cybersecurity for cross-border payments. Though this might seem to be a disconcerting task, we ultimately maintain a very optimistic view.
At UniTeller, we are supremely confident that the many threats facing international business payments can be not only identified and quarantined but also eliminated from the world economy.
After all, mitigating risk is essential to maintaining trust across the payments ecosystem.
Laying the Foundation: Emerging Trends to Consider
There are myriad components to cybersecurity—particularly at the nexus of cross-border payments and the digital world.
Fortunately, these expansive topics can be classed into three key pillars.
Macroeconomic Expansion
The rise of fintech companies and alternative payment platforms has powered the global payments market.
2023 saw an estimated market value for digital payments of $4.2 billion.
If nothing else is certain, digital transformation will continue driving market expansion. Assuming international business payments maintain their compound annual growth rate (CAGR) of nearly 10%, and reach the target of $220 trillion by 2028 (all channels), cross-border payments will cement their supremacy in the global economy.
Regulatory Demands
The cross-border payments surge has not gone unnoticed by regulatory bodies.
As international business payments skyrocket, compliance expectations expand across multiple jurisdictions, with legal departments working overtime to codify the fine print.
Though regulations vary by region, they generally aim to address recurring areas of exposure, including anti-money laundering (AML), know your customer (KYC), counter-terrorism financing (CTF), fair trade practices, and data protection.
Failure to comply with these regulations results in punitive fines and criminal charges. Going forward, online payments platforms and their constituents will need to satisfy all necessary reforms if they intend to participate within the cross-border ecosystem.
Technology Advancements
Not long ago, agile, do-it-all B2B payments solutions were inconceivable. Today, they’re leveraging tokenization and encryption tools to expedite secure transactions.
As the next generation of tools come to market—including artificial intelligence (AI), quantum computing, and distributed ledger technology (DLT)—payment platforms are fast becoming more reliable than ever before.
Unfortunately, each of these trends shares something in common: cybercriminals seek to exploit them for their illicit financial gain.
Therefore, it’s imperative for payment industry professionals to stay ahead of the curve by anticipating cyber-developments long before they occur.
As Interpol admits, “cybercrimes know no national borders.” Criminals, victims, and technical infrastructure span multiple jurisdictions, bringing many challenges to investigations and prosecutions.
Cross-Border Payments: The Cyber Threat Landscape
Almost every week, a new headline decries yet another cyberattack on a bank, fintech, or even a humble mortgage provider.
In 2023, America’s financial institutions reported a 43% increase in fraud year-over-year. That’s why JPMorgan Chase spends $15 billion a year, and employs 62,000 specialists, to maintain its robust cybersecurity protocols.
But the problems aren’t merely domestic: they’re global.
Just ask the Norwegian state, which recently endured a four-month cyberattack. Or consider the island nation of Vanuatu, which was hit with a cyberattack that took their government offline for over a month.
While cross-border payments are still standing tall, one respected analyst has calculated the potential devastation of an attack.
According to Lloyd’s of London, a data breach of an international online payments platform could inflict $3.5 trillion in losses. While the U.K. insurance provider calls this figure the “weighted average” of their risk scenario, they specify extreme losses of up to $16 trillion.
This may sound more like schoolyard scare tactics than an honest review of the status quo.
In reality, however, cybercriminal syndicates have already sent the financial world into a tailspin. After all, the average cost of a cyberattack in 2023 was $4.45 million.
Though cyberattacks manifest in many forms, the most common methods include:
Phishing
In a phishing scam, cybercriminals exploit human vulnerabilities to gain control over a network. They do this via email addresses, phone calls, text messages, and websites to steal sensitive information.
Business email compromise (BEC) ranks among the most common “social engineering” attacks. In this scheme, hackers impersonate legitimate employees or vendors to defraud a company.
In 2022, there were over 300,000 phishing attacks, which cost corporations an average of $4.91 million each.
Malware
While phishing attacks often open the door to malware, this “malicious software” can also be unintentionally downloaded through infected webpages.
After malware is deployed, hackers gain unbridled access to a company’s data.
While malware can damage a computer network, it’s often used to trigger ransomware—a form of malware that holds a network hostage until the company pays a fee.
Since 2018, ransomware has cost global financial services organizations over $32 billion.
Data Breaches
These attacks enable unauthorized access of a network or device. Once hackers gain control of a target, they can leak the personal information of its clientele.
Many data breaches are focused directly on a company’s mainframe. However, some cybercriminals mask their efforts by first targeting a firm’s third-party vendor.
This recently occurred with Flagstar Bank, which was breached by a Russian hacking syndicate. Rather than directly pursuing the bank, the group hacked Flagstar’s file-sharing software, Accellion, and exposed the data of 1.5 million clients.
This scenario was replicated in the infamous 2023 MOVEit attack, which saw the same Russian cybercriminals expose over 2,600 organizations through a third-party vulnerability.
Distributed Denial-of-Service (DDoS)
This is a coordinated attempt to flood a server with fake traffic.
In a DDoS attack, a group of compromised computer systems (often called “botnets”) work in unison to disable a target. This disruption prevents users from accessing the system while leaving the company vulnerable to extortion and blackmail.
Financial services companies face over 30% of all reported DDoS attacks. Worse yet, victim companies lose an average of $6,130 per minute while their company is offline.
Identity Theft and Fraudulent Transactions
While flashy cyberattacks dominate headlines, more surreptitious modes of attack (like setting up fake supplier accounts or sending forged invoices) are increasingly common.
The most infamous version of this scheme played out in 2016 when the Federal Reserve Bank of New York paid $100 million to hackers who issued fraudulent payment instructions from a compromised account in Bangladesh.
More recently, 90% of surveyed companies admitted to encountering fraud in their accounts payable (AP) operations.
Best Practices for Cybersecurity in Cross-Border Payments
Necessity is the mother of invention.
In response to the growing threat landscape, cybersecurity professionals have developed a range of data defense mechanisms.
1. Multi-Factor Authentication
Cybercriminals can quickly hack over 50% of commonly-used passwords.
While that’s discomforting, here’s some good news: Multi-Factor Authentication (MFA) raises the barrier to entry.
By requiring at least two verification factors (ideally three), MFA prevents hackers from guessing their way into a data breach—or leveraging brute force attacks to perpetrate a data breach.
2. Employee Training
Human error opens the door to 95% of all cyberattacks.
To protect your company, your employees must undergo rigorous cybersecurity training, whether via in-house education or a third-party instructor.
Employees are the target of cybercriminals and deserve to be equipped for digital self-defense. That’s especially true in the age of remote workforces.
3. Antivirus Software
While restricting human error, it’s equally important to shield your company’s devices.
This can be accomplished by installing antivirus software across your digital infrastructure.
Just remember to set automatic updates, so your software can swiftly identify emerging (and even unnamed) cyberthreats.
4. AI Fraud Detection
Artificial intelligence predicts and prevents cyberattacks before they occur.
Though it sounds like science fiction, it’s a very real (and affordable) technology.
By using machine learning algorithms, AI can identify anomalies in their infancy. This omniscient threat detection eclipses human intelligence on this matter.
5. Compliance Checks
While compliance regulations can seem constraining, they’re essential for cybersecurity.
In fact, many such standards are instituted to protect you and your customers from exposure.
For example, Payment Card Industry (PCI) Data Security Standards (DSS) are mandatory for all vendors that handle cardholder data. This twelve-step PCI DSS checklist provides an ideal roadmap for online security—remember that noncompliance can result in fines.
6. Incident Response Plan
While actively avoiding potential attacks, it’s wise to establish an incident response plan (IPR).
Generally speaking, an effective IPR framework should be able to quickly detect, quarantine, and eradicate an active threat.
It must also provide clear policies to recover control of your digital infrastructure, review potential damages, and rebuild your defense protocols (if necessary).
You’ll have plenty of latitude to create your own IPR. Just make sure your employees can confidently and consistently repeat each protocol.
7. Data Loss Prevention (DLP)
Data Loss Prevention (DLP) software mitigates the risk of data loss and damage.
By constantly analyzing network traffic, DLP protects data in every situation—whether it’s being transferred, reviewed, or sitting in storage.
In fact, DLP protocols provide three benefits:
- It satisfies compliance requirements (including PCI DSS)
- It blocks data exfiltration
- It prevents data destruction in the aftermath of a breach.
UniTeller: Your Business Payments Partner
Thus far, the payments ecosystem has been left (somewhat) unscathed by cybercriminals.
While we’re grateful for that, we shouldn’t take this digital threat for granted. As the Roman army commanders famously warned “in times of peace, prepare for war.”
In the realm of cybersecurity, the war is always much closer than it seems.
At UniTeller, we remain firmly committed to providing the highest standards in cybersecurity.
Why? Because we deliver digital payments solutions that streamline cross-border payments—and our success in that mission depends on the effectiveness of our security practices.
That’s why we invest in state-of-the-art safeguards, AML measures, and encryption technology: so our business partners can enjoy true security and peace of mind.
The gateway to secure cross-border payments is just one API integration away.
Join us to gain the ultimate partner in B2C, C2B, and B2B payments solutions.
