Online fund transfer is perhaps the best and most useful feature made available to people by the Internet. In the absence of this feature, it used to take several days to transfer money from one bank account to another. For making a payment, one had to issue a paper cheque, deposit it with the bank and then wait for few days for the funds to reach the payee account. With the availability of online transfer facilities, all these steps have been reduced to just a few clicks of the mouse and, in most cases, the transfer takes place almost instantly or on the same day. This facility, however, doesn’t come without its share of concerns for fraud, which is usual with any financial activity. It is important to ensure that security measures are in place to prevent any fraud.
Security Measures for Online Transfer of Funds
There are several security measures that banks usually put in place to safeguard online transactions against fraudulent activities. As a consumer of the service, you must be aware of these security measures. Two key security measures are:
1. Authentication: The process of authentication is the first step in ensuring that only an authorized person is allowed access to the bank to bank online transfer facility. Authentication is performed using a combination of the customer’s unique identifier, usually a username, bank account number or a customer ID, and a password. To make the authentication process more robust, some banks have also started using two-step or two-factor authentication. This involves using another access code that is issued in real-time to the customer through an SMS or email on their registered phone number or email address. Only when a person is able to pass the authentication, is he given access to the account for making transactions online. It is important to ensure that the password used for accessing the online bank account is made complex, kept private and changed often to prevent theft and misuse.
2. Encryption: Encryption is the process of encoding information so that only authorized recipients, with a proper decryption key, can read it. Without a decryption key, decoding any encrypted information requires huge computing resources and a lot of time. That is why encryption acts as a deterrent against information theft. Whenever an online transfer is made, information about the transfer travels over the Internet from the user’s computer to the bank’s servers. This information can be stolen while it is in transit. Encrypting the transaction information makes sure that even if it is stolen, the information cannot be misused.
Awareness about security measures and possible fraud scenarios also plays an important role. Banks must ensure that customers are aware of all security features available to them. They must communicate any possibility of fraud, suspicious activity on the individual’s account or any fraudulent activity prevailing in general.