As a SaaS provider, venturing into payments solutions may be one of the most lucrative opportunities for generating an additional revenue stream. 

That being said, SaaS payment security is an essential thing to consider. You need to have fail proof mechanisms in place to prevent your customers falling prey to breaches and ensure that their data is secure. 

Besides having security protocols, SaaS payment service providers must also adhere to industry-specific compliance requirements. Non-compliance can not only cause reputational damage but also significant monetary losses.

In this article, we’ll explore some of the payment security practices that can enable your SaaS platform to protect sensitive payment information and data. Needless to say, this is immensely important to ensure client confidence, minimize losses, and comply with industry regulations and standards.

The Importance of Payment Security For Saas Companies

Offering embedded payments can bring in a host of challenges for you to tackle:

• Security threats such as credit card fraud, account takeover, friendly fraud, and identity theft

• Data breaches due to weak network security, insecure APIs, phishing attacks, or insider threats

• Regulatory penalties under standards like PCI DSS, GDPR, etc.

• Ransomware and malware that steal sensitive data, lock systems, and disrupt operations

• Supply chain threats due to vulnerable third-party services or APIs

As a SaaS company, you would need customer confidence in your platform. Gaining a reputation for poor data and transaction security could lead to a massive loss of existing customers and difficulties acquiring new ones.

Understanding Key Security Standards and Regulations

The first step to providing secure payment services is understanding the industry standards must comply with. Consider the following.

PCI DSS compliance

Payment Card Industry Data Security Standards, or PCI DSS for short, are security standards that every business handling credit card information must meet. These are deemed necessary to maintain a safe environment for cardholders. While PCI DSS regulations have different levels based on the volume of transactions processed, the key requirements across all levels are:

• Building a safe and secure environment using firewalls, secure network configurations, and change management processes

• Protecting cardholder data using encryption

• Updating anti-malware software and applying security patches to maintain a vulnerability management program

• Access control using strong authentication

• Regular monitoring and testing

General Data Protection and Regulation (GDPR)

For SaaS companies operating in the EU or handling data of EU residents, strict compliance with GDPR is mandatory. Key considerations to meet these standards are:

• Data protection using techniques like minimization, encryption, anonymization and tokenization

• Ensuring a lawful basis for data processing, that is consent, contractual necessity, and legitimate interests

• Maintaining the rights of data subjects such as access, rectification, erasure etc. 

• Ensuring third parties, such as payment processors and payment gateways, comply with GDPR

• Conducting impact assessment for high-risk personal data

Other relevant regulations

SOC 2 stands for System and Organization Controls 2 and is another relevant standard for SaaS providers. It aims to assess the controls and processes of a company to protect the privacy and data confidentiality of its customers. The main focus of SOC 2 is on the five Trust Service Criteria: Security, Availability, Confidentiality, Processing Integrity, and Privacy.

CCPA, on the other hand, stands for the California Consumer Protection Act. The law places some explicit obligations on businesses handling sensitive customer data and empowers customers with certain rights concerning their data. Under this law, businesses like SaaS providers must have reasonable security procedures in place aimed at protecting data from unauthorized access, disclosure, and destruction.

Anti-Money Laundering (AML)

To remain safe from money laundering, SaaS providers must thoroughly assess the risks associated with the geography, customer base, and transaction types they are dealing with. Having robust KYC norms is central to maintaining high AML standards.

Likewise, regular monitoring and surveillance can go a long way in detecting suspicious transactions and user activity. While all of these are the general expectations for businesses dealing with payment processing, it is also necessary to adhere to local or regional standards concerning money laundering. Some relevant examples are:

• Bank Secrecy Act (BSA) and the Financial Crimes Enforcement Network (FinCEN) regulations in the US

• Anti-Money Laundering Directive (AMLD) of the European Union

• Proceeds of Crime (Money Laundering) and Terrorist Financing Act in Canada

• Proceeds of Crime Act 2002 (POCA) in the UK

• Regulations of the Financial Action Task Force (FATF)

Compliance to these is necessary for SaaS payment providers when operating internationally.

Best Practices for SaaS Payment Security

Now that you have an idea of the payment industry standards and regulations you must comply with let’s look at some best practices in payment security.

Implement tokenization and encryption

Tokenization decouples sensitive data from actual transactions and replaces it with tokens. This significantly reduces the risks of fraud and data breaches, while also reducing the compliance costs of a SaaS provider. 

Encryption ensures that unauthorized third parties do not get access to the data while it is being transmitted. It, therefore, helps to prevent attacks like man-in-the-middle and ensures data integrity. With end-to-end encryption in place, only the intended recipient can access the payment information. 

Adopt secure authentication protocols

Add a layer of security to your system by putting in place Multi-Factor Authentication (MFA). By asking users to authenticate their identity using multiple factors (something you know, something you have, or something you are), MFA is effective at minimizing breaches. SaaS providers can use MFA for both user accounts as well as administrator access.

Likewise, with Open Authorization (OAuth) you can allow third-party applications to gain limited access without revealing your password. This eliminates the need to store passwords, delegate permissions effectively, and grant granular access control.

Conduct regular security audits and vulnerability testing

Conduct regular security audits to zero in on any vulnerabilities in your systems, ensure compliance, and build a robust security system against attackers. Penetration testing can be an effective way to ensure security and cover loopholes. This simply refers to a simulated cyber attack against a system to uncover vulnerabilities that an attacker can exploit.

It may also be quite helpful to gain an outsider’s view of your system and its vulnerabilities. For this, seek the help of third-party security firms that have expertise in identifying weaknesses and improving overall system security.

Ensure secure API integrations

Since payment processing involves transmitting sensitive data such as credit card information, you must secure API connections between your platform and the payment processor. For secure APIs, make sure you follow these best practices.

• Use secure and unique API keys

• Implement API key permissions

• Use strong authentication and authorization

• Encrypt API keys in transit and rest

• Limit API key exposure

• Revoke compromised or unused APIs

• Use secure third-party integrations

• Use an API gateway

• Use strong access controls and data segmentation

Put in place Role Based Access Control (RBAC) by assigning permissions to users based on their roles. This limits the access that individuals have to information and function in their domains and thus prevents misuse and accidental exposure.

Separate sensitive customer payment data from the rest of your business data. This is the first step towards gaining more control over sensitive information and fortifying it with further security measures. 

Partner with a secure payment processor

As a SaaS provider, you must also ensure that your payment processor has ample security measures in place. A payment processor with stringent security standards reduces the risk of fraud, enhances compliance, and boosts operational efficiency and customer trust in the long run.

When choosing the right payment processor for your platform, you might want to look for the following:

• PCI DSS compliance

• Data encryption

• Security audits and testing

• Access control

• Authentication tools

• Fraud prevention tools

1. Educate staff and users on security practices

The human element is probably the most important part of your security journey. It is important therefore that they’re aware and well educated about best practices. Provide regular training to your staff about data security to keep them up-to-date with new threats and responses. Likewise, make your users aware of safe payment practices to protect their accounts. 

Handling data breaches and incident response

Despite all the above efforts, if a data breach occurs, you must respond appropriately in time.

• Identify the breach, confirm its scope, and take steps to contain it.

• Notify the relevant internal teams, stakeholders, and authorities about the incident. 

• Identify the customers affected and assess the extent of damage.

• Provide quick remediation like freezing accounts.

• Investigate and cover the vulnerability.

• Conduct audits and follow up regularly.

The legal obligations in case of a data breach will depend upon the standards in question. PCI DSS, GDPR, and CCPA each have their legal obligations that you must be aware of, depending on your geography.

Future trends in SaaS payment security

SaaS payment security is a dynamic field and is expected to evolve rapidly over the next few years. Technologies like AI-driven fraud detection are expected to play a greater role. Likewise, blockchain and decentralized payment systems are expected to pose new challenges to payment security. 

These changes will also shape the regulatory and compliance landscape of payment security. Stronger penalties, broader applicability, stricter authentication requirements, stricter API security standards, global coordination, decentralized finance regulation, and regulation of crypto-currency are a few changes to look out for.

Final words

As a SaaS provider, encryption, tokenization, authentication, access control, regular audits, and monitoring are your best companions for creating a secure payment ecosystem. However, with the changing nature of threats, you simply can’t be caught napping.

You must keep upgrading your systems regularly to meet new challenges. This is essential if you want to make a mark in terms of customer confidence, loyalty, and growth. Your reputation precedes you!

If you’re looking to accelerate your fintech monetization, check out Preczn. Our operator-first platform can help you unify your SaaS customers, data, providers, and services in a single place. Contact us today to learn more.