Secure Payments

Definition of Secure Payments

Secure payments are made up of SPSs, or secure payment systems. The utility of these systems is to provide online payment processing and function as an information service system that provides security. Two main tools or mechanisms used within any given secure payment system are payment gateways and payment processors; payment gateways provide security for the transaction, while payment processors actually manage the transaction by digitally transporting the currency. There are many viable forms of secure payments and some of these include Apple or Google Pay, third-party apps such as Venmo or Cashapp, or contactless payments. There are also functioning forms of secure payments that work for cryptocurrency, although the long-term viability of blockchain transactions and crypto in general is up for debate.

History of Secure Payments

The first form of secure payments was based on electronic fund transfers from the 1870s, which was the first time you could pay for goods and services without having to be present during the transaction. Then, in 1994, online banking services were launched by Stanford Federal Credit Union and the Presidential Bank in 1995 which offered clients access to their accounts online.
At the same time, the first online retail interactions by Internet Shopping Network and NetMarket took place. More well-known platforms that use secure payments were invented in 1995–namely eBay and Amazon as well as Alibaba which opened in 2003 and 2008. All of these relied on firewalls to make online payments more safe and secure. Pizza Hut, however, was the first company to open an online store for commercial purposes with the use of the recently invented World Wide Web. Netscape Communications created a way to ensure that shopping systems, online banking, and online retailers were able to offer their clients encryption to ensure secure data transfers.

Cryptocurrency and Secure Payments

Cryptocurrency is a digital form of currency, holding no inherent or intrinsic value but the value placed in it by investors and the users of the currency. It is highly volatile and fluctuates often, and its safety measures are often proven to be fallible and reduce the overall credibility of this form of currency. There are secure payment systems, a good example being Stripe, that function with the purpose of processing secure payments involving cryptocurrencies; the transaction is entirely online, and nothing physical needs to be used except a device. One problem with using cryptocurrencies as payment methods is the function of blockchains; while they are secure there is always the risk of a hacker taking advantage of a flaw in a wallet or transaction, and currency can be stolen from and is stolen from crypto users at a higher rate than a bank or a more traditional form of currency.

This concept can be linked to virtual worlds since this currency exists in its own realm and does not have any real value besides what is assigned to it.


Apple and Google Pay

How does it work as a secure payment?
Apple Pay uses near-field communication, which is a chip-based technology that communicates with a card reader without actually needing to make contact with the card. It also uses a tokenization method which is a unique encrypted code created for one-time use and can’t be used again. That code, instead of your card number, is used to authorize the transaction. This also means that the merchant is never given your original card number. Apple doesn't have access either because it doesn’t store your full card number. All of this gets rid of the risk of card skimming because your card is never being used and devices in card readers can’t store your information.

+ Third Party Apps

How TPPPs Work

A relatively recent method of payment methods includes third-party payment processors. Apps such as Venmo, Cash App, or Paypal are considered TPPPs. A TPPP is an entity that allows merchants to accept payments in the form of credit cards or any other online payment method. Some common uses of TPPPs include paying someone you owe money to, paying for small services, or committing fraud or scamming people for their money.
Taking a deeper look into a popular, if not the most popular, TPPP, Venmo, can also be considered a peer-to-peer payment application. Venmo acts as the middleman between the payment sender and the receiver. This allows easy and efficient requests and sending of money to a user's friends and family. Venmo as a company makes money by creating an instant transfer fee if users opt to.

Touchless Payments

As opposed to traditional cards with a magnetic strip, these cards look the same as regular ones, but inside there’s a small antenna that allows wireless communication with a card reader, called a chip. When each transaction occurs, a unique transaction code is generated that makes it difficult to copy and use. These can be used at any card reader that has the touchless card reader symbol, and you can typically use Apple/Google Pay at these as well.
More and more businesses are accepting this type of payment due to convenience and security. Restaurants and small businesses have upgraded to toast and square payments because customers have more flexibility with payment methods and these systems provide more security as well.

Strengths in the Future of Secure Payments

As advancements in secure payments continue to be introduced, many economic and social strengths follow. With online shopping becoming more popular, as 43% of Americans prefer shopping online over in-person, companies and businesses must adapt to creating and improving efficient and consumer-friendly methods of secure and online payments. For example, this is starting to be seen by big companies such as Amazon, which is offering Venmo, a popular TPPP, as a method of payment, in contrast to more traditional methods of payment such as a credit or debit card. The inclusion of this new method gives more sales to Amazon, as people who primarily use their Venmo balance can purchase from Amazon.

Weakness in the Future of Secure Payments

Although there are strengths in advancements in secure payment systems and methods, there are many weaknesses and challenges that providers and consumers will face. Such weaknesses include threats from scams and criminals. This can be seen predominantly in third-party payment applications such as Cash App. According to CNBC, when asking former employees, they state that 40-75% of the accounts made on Cash App were fake or fraudulent. In addition, 9% of all TPPP users reported getting scammed at least once. To combat this weakness, developers of these applications must provide education on how to avoid scams and criminals to create safer environments when transferring money.

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