Customer demand is the main driver for companies in the financial sector to add new payment options. From traditional, well-established operations to mobile and instant payment, the challenge of ensuring the security of digital means of payment and financial transactions is constant. This is when HSM Technology makes the difference.
In addition, the speed of transactions is also changing the way financial transactions are made. Organizations and consumers are looking for low response times, which means that the availability of the payment system must be high and the information always accurate.
Which leads us to understand that security is at the heart of the payment ecosystem. To be sure to bring the highest levels of security in the increasingly complex and ever-changing digital means of payment and financial transactions, operations rely on the use of HSM (Hardware Security Module) technology.
Digital means of payment and financial transactions: new challenges arise and must be addressed
The banking and financial services sector is challenged every day. In addition to managing payment operations and financial transactions, they need to perform identity and access management, cryptographic key management, use blockchains, go to the cloud and maintain compliance.
To contribute to this real-time process, technology, like HSM, is constantly evolving. New challenges appear and must be met.
As payment systems are unique, hardware providers often find themselves conflicted when trying to keep up with market developments.
The need to implement modifications to existing hardware security modules (HSMs) while maintaining compliance has become an ever-present and unavoidable reality for the payments industry, banks and financial services companies.
An HSM applied to digital means of payment and financial transactions is a tamper-resistant hardware device. It is mainly used by the banking and financial sector to provide high levels of protection for customers’ cryptographic keys and PINs.
These keys and PINs are used during the issuance of magnetic stripe and EMV chip cards (and their mobile app equivalents), and in the subsequent processing of credit and debit card payment transactions.
HSMs dedicated to digital means of payment typically provide native cryptographic support for all major card scheme payment applications and undergo rigorous independent hardware certification under global schemes such as FIPS 140-2, PCI and other additional regional security requirements.
Some of its common use cases in the payments ecosystem include:
- PIN generation, management and validation;
- PIN lock translation during network switching of ATM and POS transactions;
- Card, user and cryptogram validation during payment transaction processing;
- Issuance of payment credential for payment cards and mobile applications;
- Point-to-point encryption (P2PE) key management and secure data decryption;
- Sharing keys securely with third parties to facilitate secure communications.
5 Practical benefits of HSM for securing digital means of payment and financial transactions
HSMs are essential for companies that handle data from digital means of payment, such as credit or debit cards, but other companies can also benefit from using HSMs.
There are many benefits to using an HSM to protect your data in digital payment and financial transactions:
1. Offers maximum security
HSMs provide one of the highest levels of security against external threats. It is safe to use and helps protect against malicious attacks.
2. Take customer data seriously
Show customers that you take their privacy seriously by making an effort to protect their information, especially digital means of payment.
3. Get HSM as a service
For companies that cannot invest in an HSM but need to be PCI DSS certified, some IT providers offer HSM as a service, which makes this technology more accessible and affordable for some companies.
4. Keep your key in only one place
Unlike storing a key in software – where it could virtually end up anywhere – HSM alone keeps the key, making it easier to track and secure. The key cannot leave the device.
5. Enjoy tamper-proof protection
Some HSMs are tamper-proof and others are tamper-resistant depending on their specific features, providing a level of security that is difficult to achieve when using software alone.
HSMs have historically provided the most secure protection for encryption keys
For digital means of payment, hardware security modules (HSMs) mean one important thing: double protection, because they actively protect the keys that secure your data.
These external device or plug-in hardware modules are primarily purchased and provisioned locally in an enterprise data center.
But as businesses rapidly adopt cloud environments – private, public and hybrid – the HSM approach to key management is no longer straightforward.
Unlike purely software-based solutions, they provide hardware-based protection for critical systems such as public key infrastructures (PKIs), databases and web or application servers.
In this way, HSMs offer maximum security against external physical, chemical and mechanical attacks.
But HSMs can do much more for digital means of payment. The processes of encryption and decryption, issuance of electronic certificates, generation of digital certificates or signatures, and authentication of users and devices can be “outsourced” to HSMs for execution in compliance with maximum security standards and legal provisions.
Thus, HSMs also protect safety-critical processes and effectively prevent the reading and manipulation of confidential keys.
Learn more about the use of HSM applied to payment methods from E-VAL experts and how to apply encryption technology effectively in your business.
We are available to answer your questions and help you define the best ways to protect your organization and your digital means of payment against data leakage and theft.
Eval has been developing projects in the financial, health, education, and industry segments for over 18 years. Since 2004, we have offered solutions for Authentication, Electronic and Digital Signature, and Data Protection. Currently, we are present in the main Brazilian banks, health institutions, schools and universities, and different industries.
With market recognized value, Eval’s solutions and services meet the highest regulatory standards for public and private organizations, such as SBIS, ITI, PCI DSS, and LGPD. In practice, we promote information security and compliance, increase companies’ operational efficiency, and reduce costs.
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