How encryption safeguards sensitive payment data

You’re growing your business, serving your customers, and hitting your goals – but there’s a catch: every online transaction you process is a potential cyber risk. Processing online payments requires you to handle the sensitive payment data of customers. One breach is all it takes to lose hard-earned trust, damage your reputation, and derail your progress.

How do you keep customer payment information safe, prevent fraud, and build trust in an era of constant cyber threats?

Encryption. It’s more than a technical safeguard – it gives your customers confidence to click “Pay Now” with peace of mind, and ensures their transaction remains protected.

What is encryption of payment data?

Encryption transforms sensitive payment data – like credit card numbers or transaction details – into unreadable code, protecting it from unauthorised access. Only those with the right decryption keys can convert this information back into a usable format.

When you're handling digital payments, encryption ensures that customer data remains secure at every step.

Why is encryption important for payment security?

Encryption is an essential layer of protection for several reasons.

• Encryption improves data security

Encryption protects sensitive information from interception during transmission or storage. Encrypted data is useless to anyone without the proper encryption keys.

• Encryption ensures compliance with regulations

Many regulations, like PCI DSS, require encryption to protect payment data. Meeting these standards not only prevents fines but also boosts your credibility with customers and partners.

• Encryption builds customer trust

 Your customers may not know the details of your business’s security measures, but they trust you because of your strong reputation and the seamless payment experience you provide. Customer trust in payment security is built by keeping transactions smooth, secure, and free of complications. By offering payment processing directly within your site or platform, avoiding redirects to third-party pages, you create a more reliable and effortless experience for your customers.

How does data encryption work to protect sensitive payment data?

Data encryption is applied to online transactions in three ways to secure payment information.

• Encryption In transit

When payment data is sent over a network – such as from a customer’s browser to the payment processor – it’s vulnerable to interception. Encryption in transit protects this data by converting it into a coded format that's unreadable without a specific key during transmission. The server then converts it back into its original format using the appropriate decryption key.

The process of securely transmitting the decryption key to the recipient is a critical part of encryption in transit. One of the most common and secure methods for key exchange is the Transport Layer Security (TLS) handshake. This means that the server sends its digital certificate to the client (web browser in the instance of an online payment) to show it’s trusted, and then a cryptographic key is shared. This key can be used by the server to unscramble the secure payment data.

• Encryption at rest

Encryption at rest secures payment data when it's stored on servers or databases. This method ensures that even if a storage system is breached, the data remains unreadable. Encryption keys for encryption at rest are often managed by Key Management Services (KMS). These are centralised services that manage encryption keys, including their generation, storage, distribution, and rotation. Cloud providers like AWS and Google Cloud offer KMS solutions. Only when the data is accessed is it decrypted back into its original format using the appropriate key.

• End-to-end encryption (E2EE)

End-to-end encryption goes a step further by ensuring data remains encrypted throughout its entire journey – from the moment it’s sent (e.g., at a payment terminal or online checkout) to its destination, ensuring only the sender and recipient can read it.

The encryption keys are exchanged directly between the sender and recipient, often using public key cryptography. The data is decrypted only on the recipient's device, not on any intermediate servers.

What encryption methods are used to secure payments?

There are several encryption techniques commonly employed to secure payment data. Here are two key methods:

SSL/TLS Encryption

SSL/TLS (Secure Sockets Layer/Transport Layer Security) ensures sensitive information, like credit card details, stays private during online transactions. It works by creating a secure connection between your browser, the website, and the payment processor.

When a user visits a secure website, the browser and server establish a connection using SSL/TLS protocols. The process begins with an SSL/TLS handshake. The browser requests a secure connection, and the server responds with its public key and digital certificate, verifying the server's legitimacy. The browser uses the server's public key to encrypt a session key to establish secure communication.

Once the session key is exchanged, both parties encrypt and decrypt data using symmetric encryption, ensuring confidentiality and data integrity.

AES Encryption

AES (Advanced Encryption Standard) is a powerful way to keep data safe. It uses the same key to both encrypt and decrypt information, making it efficient and secure. Essentially, it turns plain text into unreadable code through multiple rounds of mathematical processes.

You can choose from 128-bit, 192-bit, or 256-bit encryption keys, depending on how much security you need. The larger the key, the stronger the protection it provides against unauthorised access.

AES is considered highly secure and hasn't been broken by any known practical attacks. It's used by governments, financial institutions, and other organisations that require strong data protection.

Challenges of payment encryption

While payment encryption is essential for protecting sensitive data, implementing it comes with its own set of challenges that businesses need to navigate carefully.

One major challenge is key management. Improper handling of these keys can lead to significant vulnerabilities, ‌exposing customer data to risks. This task can be challenging for businesses that lack dedicated resources or specialised expertise to develop and maintain robust security protocols.

Another challenge is the need to stay ahead of evolving cyber threats. Ongoing monitoring, frequent software updates, and staying informed about the latest security best practices are required to stay ahead of these evolving threats.

How partnering with a payments provider can help to overcome encryption challenges

Fortunately, you don’t have to face these challenges alone. Many payment providers offer built-in encryption that meets the high security standards of PCI DSS. They manage the complexities – such as secure key management and system updates – allowing you to focus on your core business operations.

By partnering with a trusted provider, you can accept digital payments with confidence, knowing that your customers’ data is well-protected.

How Airwallex’s Payments solution protects payment data

At Airwallex, security is at the core of everything we do. Customer data is encrypted everywhere it's sent and stored. With industry-leading encryption technologies, like TLS v1.2 and AES256, you can be sure that sensitive information, such as personal and financial data, transmitted or stored on our servers is secure and unreadable by anyone who is not authorised to see it.

Using Airwallex Payments solutions to accept online payments, you can focus on what matters most: running and scaling your business.

Sources:

¹https://www.splunk.com/en_us/blog/learn/end-to-end-encryption.html

²https://www.emerchantpay.com/insights/end-to-end-encryption-e2ee-what-is-it-and-how-does-it-work/

³https://www.imperva.com/learn/data-security/data-at-rest/

⁴https://cloudian.com/guides/data-protection/data-encryption-the-ultimate-guide

⁵https://aboutssl.org/ssl-guide/

⁶https://www.cloudflare.com/learning/ssl/how-does-ssl-work/