Does Online Merchant Banking Entail Any Security Risk?

Online merchant banking entails the same level of risks as other types of banking. This is due to the nature of online attacks by hackers that include worms, viruses, phishing and other techniques designed to defraud or disrupt online commerce. The online environment is as safe as the extent a merchant bank puts in place safeguards and firewalls designed to discourage and repel attacks and protect the integrity of data residing on their systems.

Potential for Security Risks

Merchant banks deal almost exclusively with businesses, helping them process transactions for payment of products and services. Given the countless number of business transactions that take place on a daily basis from all types of companies gives rise to the potential for computer attacks. The integrity of a merchant bank’s payment processing services is threatened on a constant basis. It is the job of the merchant bank to provide a system of security that protects sensitive customer data.

Data Encryption

Merchant banks engage in the same level of protection as other businesses do to protect the transaction data that they process. This includes encryption software that encodes payment information that a customer provides at point-of-sale or online. The encryption software takes information provided from a customer’s credit or debit card or checking account and changes the appearance of that data as it is sent. A unique encryption key is established for the data making it useless for anyone to use other than the person or entity that has the key to unlock the data.

Firewalls and Security Breaks

Merchant banks also establish firewalls and security breaks to prevent unauthorized access to data from an outside hacker.  A firewall acts as a door that requires certain passwords or security information in order to pass through.  A hacker may be able to crack an initial firewall set up by a merchant bank.  It is the goal of a merchant bank through its security system to prevent the intruder from gathering further access to the system and causing damage to the data stored.  Their constant vigilance and monitoring provides the best security defense against security attacks.

Ongoing Monitoring and Prevention

Security is an ongoing concern for merchant banks as it is for other types of businesses that rely heavily on online electronic processing. A merchant bank works to prevent unauthorized access from the outside and limits the ability of employees to invite attackers from the inside. This can include limited access to private email accounts or websites that are not business related. These methods slow attempts from hackers to send viruses, malware and other forms of destructive software.

It is the responsibility of merchant banks to protect their systems and provide their business customers with assurances that all appropriate measures are being taken to ensure the integrity of the data.