E-Checks are inherently more secure than paper checks. They are also subject to additional consumer protections (USA – Regulation E).
The five major security components for e-Check transactions are:
- Authentication: This is the process whereby the payments provider verifies the individual submitting the account information. Authentication ensures that fraudulent payment information is not submitted to the merchant.
- Encryption: This is the process of “masking” sensitive data, rendering it non-sensitive—and thus useless—if it’s stolen. Encryption is required for all ACH transactions including eChecks, that occur over unsecured electronic networks.
- Public key cryptography: This is part of the encryption process and is used in ciphering the data, to protect it in transit.
- Digital signature: A digital signature with time stamps is an encryption process used to ensure that eCheck transactions cannot be fraudulently duplicated.
- Certificate Authorities: Certificate Authorities issue Digital Certificates like the SSL Certificate to protect information, encrypt transactions, and enable secure communication.
- Duplicate detection: This is a fraud detection strategy that monitors for duplicate eCheck transactions and suspicious activity.