payments transactions digital money reality that has come to stay

Payments, transactions and digital money: a reality that has come to stay

Hardware Encryption and Blockchain Technology, keys to the securization of this operation.

Today we would like to share with you this article published in the IT Security’s special edition about New Security Challenges within the Financial Environments

Just over a year ago everything changed in our lives and a clear example of this is the different way we buy and make use of the methods of payment today, where digital transformation is the protagonist of this new social and economic situation.

All this is evident in different actions such as the increase in purchases through e-commerce systems, whose growth, during 2020 in Spain, has been 67% along with the proliferation of electronic banking and mobile banking, which has increased from 44% to 57% in its usage ratio. Likewise, the use of paid Apps on mobile phones has multiplied, what is known as Open Banking (Amazon Pay, Samsung Pay…), prepaid virtual cards, wallet systems, contactless payments, the Internet of Payments (IoP) through smart devices connected on the Internet of Things network and tokenization of cards. All this, coupled with a large expansion of new financial agents such as Fintechs and the consolidation of “decentralized finance” or DeFi, where cryptocurrencies, smart contracts and Apps built in Blockchain technology originate.

The number of transactions in this new digital financial ecosystem represents a higher percentage of cash payment operations, which decline in 2020 is quantified by 45%, although we must not forget that for its effectiveness, transparency and trust, it is essential to implement a robust securization.

Hardware-based cryptographic encryption for a more secure Blockchain

The risk of online fraud is growing exponentially associated with the growth of digital methods of payment; that is why financial institutions need to strengthen security by implementing measures such as two-factor authentication on the basis of the PSD2 Directive or greater transparency and governance in the case of using technologies such as Blockchain to make cross-border digital payments, bank clearing operations or exchange of international payment cards. As well as in the reliable management of cryptoassets or the securization of payment environments associated with the Internet of Things “Blockchain of Things“.

While Blockchain disruptive technology today for immutability, decentralization and transparency can be considered reliable for certain business processes, we can strengthen it, in the financial sphere, with the implementation of Hardware Security Module (HSM) cryptographic that strengthen the Blockchain network infrastructure, whether public, private or hybrid, for financial operations, cryptocurrency management and the protection of other business processes.

The growth of digital payments by more than 30%, globally over the past year, together with the new digital channels, to the detriment of the use of cash, coupled with the proliferation of digital currencies (CBDC) and cryptocurrencies in an unregulated market (except exceptions such as the case of Chinese e-Yuan, but with announcements and expectations of future regulation by many Central Banks in the world , like the ECB with the creation of Euro Digital) involves taking on the reality of a new economy. The so-called “Crypto-economy“, since cryptography here plays a key role for the protection and security of financial assets that will bring with it greater adaptation and trust, both to users of the new digital spectrum and to financial institutions, always interested in minimizing security risks in the methods of payment, such as impersonation or fraud.

Certainly, this new economy requires moving towards a situation where fiat money and digital currencies coexist in a framework regulated and ordered by Central Banks in which new disruptive technology, such as Blockchain, meets the same or higher levels of security requirements than those required by Banking, such as the use of robust cryptography to protect financial transactions , endorsed by an internationally accredited body, such as PCI HSM PTS Certification in the field of methods of payment.

To learn more about the situation and state of the art of this technology in Spain and Latin America we encourage you to read this II REALSEC Blockchain Report, elaborated together with IDC.

Jesús Rodríguez

CEO of REALSEC

 

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