Introduction
A recent report states that a massive data breach of Hot Topic, Torrid, and Box Lunch, advertised by the threat actor Satanic, has reportedly exposed the personal data of 350 million customers, including names, emails, addresses, phone numbers, and birthdates, billions of payment details and loyalty points, including the last 4 digits of customers’ credit cards, card types, hashed expiration dates, account holder names and profile identifiers.
It’s high stakes: your business can suffer not only financial loss but damaged reputation and lost customers from a single security breach.
This blog will outline the top three payment security threats retailers face today and proactive strategies to mitigate these risks.
Why Payment Security is Important for Retailers (Impact of Non- Security on Retailers)
As stated by Forbes, news recently broke that a gap in Adobe Commerce and Magento software resulted in the breach of customer data from over 4,000 online merchants – some 5% of their supported online stores.
Ray-Ban, National Geographic, Cisco, Whirlpool, and Segway have already been victims of the so-called “CosmicSting” attack.
According to Retail Touchpoints, in 2024 alone, several high-profile companies, including Dell, AT&T, Ticketmaster and Disney have suffered the consequences of a major breach.
For retailers and consumer businesses, a surge in data breaches presents difficult challenges.
The retail sector is among the industries facing major attacks resulting in data breaches, as many as millions of records that are compromised each year can come in different forms each representing a high risk to businesses and consumers.
To mention a few types:
- POS Hackings: Hackers steal cardholder data during transactions by compromising POS systems.
- Phishing Attacks: The fraudsters trick employees into divulging sensitive credentials, usually gaining access to the payment system.
- Ransomware Attacks: Cybercriminals encrypt business data and demand ransom for the decryption of the same, thereby stopping operations and risking data exposure.
- Third-Party Vendor Breaches: Weak links in partner networks open the doors for attackers to access the retailer’s system.
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With the growing sophistication of cyberattacks, it’s crucial to understand the most pressing payment security threats.
Let’s explore the top three threats retailers face and how to address them effectively.
Top 3 Payment Security Threats for Retailers
Threat #1: Data Skimming
Data skimming occurs when criminals use hidden devices to capture payment card information during transactions, often at POS terminals or ATM.
Apparel brands Timberland, Dickies, Smartwool, Vans, and The North Face owner, VF Corp., stated that the ransomware attack back in December saw data leaked which included over 35 million customers personally identifiable information.
Retailers are often targeted because of their large volume data collection during every transaction. Hackers can take advantage of vulnerabilities in your payment system or third-party software that can steal this sensitive data from you.
Impact on the Retailers
- Financial Liability: The retailer will incur costs associated with fraudulent charges and reimbursements, which can be significant burgen on cash flow and profitability. Such costs usually include chargebacks and fees associated with chargebacks.
- Non-Compliance penalties: Non-compliance with PCI DSS can result in hefty penalties from payment card brands, ranging from $5,000 to $500,000 monthly. Moreover, non-compliance can lead to the revocation of payment processing privileges, thereby affecting your ability to operate.
- Reputation Damage: This would deter more customers with bad publicity and negative online reviews. Bad news spreads like wildfire, causing a serious hit to the brand image and subsequently massive PR efforts to restore the brand.
The skimming of data can be critical. Customer trust can evaporate, and you run the risk of losing quite a lot of your client base.
Additionally, legal actions can lead to even greater financial losses, not to mention the cost of public relations efforts to repair your brand image.
Mitigation Strategies:
- Implement EMV Chip Readers: With EMV technology, criminals are challenged to create cloned cards; this implementation at your Point of Sales (POS) limits the fraudster’s chances of succeeding at card-present frauds, hence making transactions more secure.
- Inspect POS Systems Regularly: Check for unauthorized hardware additions like skimmers, especially in high-traffic areas. Routine inspections help identify and remove threats before they cause harm.
- Regularly Update Security Software: Modern POS devices come with alerts for unauthorized access, notifying staff immediately of potential tampering attempts and reducing exposure time.
Threat #2: Malware
Malware targeting the payment systems can steal card details in real-time, compromising the customer data and putting retailer at risk.
According to Sophos, the average ransom in 2024 cost $2.73 million, almost an increase of $1 million from 2023.
Impact on Retailers:
- Disruption of Operations: Malware infections could shut down the payment systems; this would stop sales, make long lines, and frustrate the customers, hence reducing revenues. Prolonged periods of downtime can severely impact business continuity.
- Financial Consequences: Payment information that was stolen may lead to fraud or chargebacks, placing more financial burden on you. In court, there are expenses regarding legal fees and compensation for the compromised customer.
- Chances of Data Theft: The stealing of sensitive payment information will enable malware to steal that sensitive information, thus exposing you to lawsuits and regulatory fines. Your personal data will be sold to someone on the dark web.
- Compliance Problems: Malware- related breaches may breach payment security regulations, resulting in potential penalties and greater scrutiny from regulators, which are expensive and resource- intensive.
Mitigation Strategies
- Use Fraud Detection Tools: Fraud Detection tools can identify dubious transaction patterns in real time, minimizing the likelihood of malware. Such tools can alert you to anomalies such as unusually large transactions or multiple transactions from the same card in a short time frame.
- Monitor Transactions for Red Flags: Monitor transactions flagged by your fraud detection system and check them manually. Look for signs of fraudulent transactions, such as billing and shipping addresses that don’t match or purchases made from unusual locations.
- Regular Security Audits: Conducting regular security audits allows you to assess the overall health of your payment systems. These audits help identify potential vulnerabilities, ensuring that any weaknesses are addressed proactively before cybercriminals can exploit them.
Threat #3 How does Phishing Attack affect Businesses?
More than 80% of UK companies reported in 2022 that phishing is the most often occurring cybercrime, underlining the crucial need of better protections.
Phishing scams primarily involve false communication—mostly emails—to trick users into providing sensitive information or granting unauthorised system access.
For retailers, the stakes are especially high because hacked payment systems can result in unauthorised transactions and costly data breaches.
Financial Impact: Fraudulent access can result in unauthorised transactions and high chargeback fees, straining a merchant’s resources.
Reputational Risk: A data breach can drastically erode customer trust, resulting in lower sales and long-term damage to the brand’s credibility.
Mitigation Strategies:
- Real-time Monitoring and Analytics: Leverage advanced real-time analytics to monitor transaction behaviors and detect irregularities. By tracking unexpected login patterns and changes to payment settings, businesses can swiftly identify potential threats and respond proactively to prevent unauthorized access or fraudulent activities.
- Collaborate with Trusted Service Providers: Form partnerships with reliable payment processors and service providers that adhere to stringent security practices. These partners should implement measures aligned with payment industry requirements, including PCI DSS compliance. Collaborating with providers who possess expertise in securing payment transactions and safeguarding customer information is essential for enhancing overall security. They should offer robust security features designed to prevent cyber threats, ensuring a secure transaction environment.
- Implement strong encryption techniques: Use encryption technologies to secure sensitive payment information during transport and storage. Businesses can add an important degree of security to their payment infrastructure by making this information unreadable to unauthorised parties. This method is critical for ensuring the security of sensitive data during the transaction process.
- Regular Employee Training and Awareness: Invest in thorough employee training programs to help them better grasp cybersecurity concerns, including phishing assaults. Educating employees on how to recognise and respond to possible dangers is critical for lowering the risk of human error, which is frequently exploited by cybercriminals. Multifactor authentication (MFA) Implement multi-factor authentication in all payment systems to add an extra degree of protection. MFA requires users.
How UnityPay combats these threats?
At UnityPay, we understand the unique challenges retailers face in securing payment systems. Our payment security solutions are designed to help businesses protect themselves against the top threats, such as retail data breaches, payment fraud, and phishing attacks. UnityPay offers a comprehensive suite of security features that make it easier for retailers to stay protected:
- Fraud Detection Tools: AI-powered tools that can monitor transactions in real time, identify suspicious activity, and cut down the risk of fraud.
- Data Encryption: Advanced encryption techniques make sure that sensitive payment information is transmitted and stored in a secure manner, preventing customer data breaches.
- Compliance Support: UnityPay helps retailers adhere to data protection regulations of PCI DSS and PCI P2PE to avoid costly fines while maintaining customer trust.
- EMV Technology: Integrate support for EMV chip cards that cut down on card-present fraud at physical retail locations.
- Two-Factor Authentication (2FA): A secondary layer of security that is added to your payment systems, thereby reducing the opportunity for unauthorized access.
- Security Audits: We help retailers to conduct regular security audits to determine vulnerabilities and implement necessary updates to keep systems secure.
Hence, UnityPay’s safe payment processing services let retailer merchants to leverage payment security so that payment systems keep up with security against new threats.
Bottom Line
Retailers are now facing more attacks on payment security, including breach of data, payment fraud, and phishing attacks. These attacks jeopardize customer data, ruin the reputation of your business and its bottom line. If retailers use best practices to include strong encryption, employee training, EMV technology, and regular security audit, then the likelihood that they fall victim to threats will be lower.
It’s time to take proactive measures to secure your retail business. Protect your customers, preserve your reputation, and safeguard your revenue by adopting a comprehensive payment security strategy. Secure your retail business today by implementing best practices in payment security and staying vigilant against emerging threats.
