March 3, 2023

The Impact of Data Breaches on E-Commerce

The Impact of Data Breaches on E-Commerce

Why it is smart to start investing in the stock market?

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Should I be a trader to invest in the stock market?

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What app should I use to invest in the stock market?

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Is it risky to invest in the stock market? If so, how much?

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Tell us if you are already investing in the stock market

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E-commerce is one of the largest and most thriving online sectors in the world, rapidly accelerating and catering to the daily needs of customers worldwide. There are an estimated 12 million – 24 million eCommerce sites across the entire globe, with more and more being created every single day. According to Statista, by the year 2022, eCommerce is expected to generate $5.42 trillion in sales per year. E-commerce has been a target of hackers and scammers, owing to its humongous growth rate and massive profits.  One of the main ways that cybercriminals can gain access to this data is by exploiting weak authentication methods. 

The rising risk of security breaches in E-commerce companies has caused havoc in the global online business domain and created a significant impact in the financial domain as well. According to statistics, this industry experiences 32.4% of successful targets on an annual basis. Hackers gain access to sensitive user credentials by infiltrating the database through hacked accounts of store managers, employees or even customers. 

E-commerce data breaches are high-scale data infringements, resulting in a massive impact on the company in terms of finances and user loyalty. In 2013, Target experienced a massive data breach wherein the hackers gained access to the payment information of 40 million users. The breach resulted in the company losing $18.5 million in settlements, crushing the company’s revenue and impacting the growth trajectory simultaneously. EBay experienced a massive security breach firsthand in 2014 when hackers used the compromised credentials of three employees to infiltrate the system and hack the personal data of 145 million users

The gaps in traditional authentication

There have been several drawbacks to the traditional password-based authentication protocol. One of the most prominent factors in e-commerce is the sign-up factor. Whenever new users come across an e-commerce website, they avoid signing up altogether due to the lengthy and frustrating sign-up process. Users have to provide a detailed record of their names, surnames, email ids, and phone numbers and spend an additional amount of time to generate a unique password. This creates friction in the shopping experience and leads to frustration among customers, resulting in them opting out of the sign-up process. 

Similarly, even advanced authentication parameters like 2-factor authentication including email or phone number OTP, security codes, push notification verification etc can become a cumbersome experience for consumers. Users get frustrated with the timed OTP protocol, not receiving the verification code on time or having to constantly call customer support to complete a sign-in procedure. These frictions in user experience directly impact the company’s revenue as users may opt out of the buying journey due to inconvenient login and signup methods.

Impact of Data Breach in E-Commerce Space

Data breaches in the e-commerce sector can cost companies a fortune. However, financial loss is just a fraction of the overall implication that bestows these companies. You may also see a hit to customer trust and brand reputation, and don’t forget all the blood, sweat and tears that go into remediating a data breach. Let’s dig into the three types of costs that make robust data protection on the front end more than worth the cost.

  • Financial Impacts: Data breaches come with a significant amount of damage control measures that need to be taken by companies. Companies have to pay thousands of dollars as a part of settlements and pay their legal team to ensure minimum reputational damage. The financial impacts after a security breach are usually directly proportional to the magnitude of the breach.
  • Customer Loyalty Impact: Companies can gain back the revenue that they lost after a security breach. However, the hardest aspect of a breach is the loss of trust that customers usually feel towards the brand. In e-commerce, the trust may have played an even greater role in conversion. Paying over the internet — still a very abstract concept for many people at the time — just seems risky for clients if the company has already faced a massive security breach in the recent past.
  • Brand Image Impact: Security breaches can not only impact the trust of the existing customers but also the trust of customers who are in the conversion funnels. Even users who are remotely interested in a company may completely stop considering them for business after a massive security breach. 

When one single data breach could put all of that in jeopardy, you begin to see how important it is to ensure that your company can provide undisputed and impenetrable authentication parameters for overall security and to honour the trust of your customers.

How Can FIDO Passkeys Be A Game Changer for e-Commerce Authentication?

FIDO passkeys are becoming an increasingly popular choice for organizations in the e-commerce industry looking to enhance their security and provide top-notch user experience to their clients. 

FIDO Passkeys are an evolutionary version of Multi-factor Authentication, based primarily on WebAuthn standards and having Public Key Cryptography as its core working principle. Passkeys help companies completely ditch passwords and use alternative authentication parameters like biometric identity, security tokens etc to complete a login successfully. Passkeys generate two sets of digital credentials (keys) to aid highly secure and frictionless user login - a Public Key (such as username) available within the server database and a Private Key (such as fingerprint, face ID) stored securely within the user’s device.

There are several key benefits of using FIDO passkeys in the e-commerce sector, including:

  1. Enhanced Security: FIDO passkeys provide an extra layer of security beyond just a password. They use public-key cryptography to securely generate and store unique digital keys for each user, making it much more difficult for cybercriminals to access sensitive information.
  2. Convenience for Users: FIDO passkeys are convenient and user-friendly, eliminating the need for users to enter complex passwords or remember one-time codes. Users simply insert the FIDO passkey into a USB port or NFC reader to access their accounts.
  3. Privacy-Friendly: FIDO passkeys are more privacy-friendly than other MFA methods, as they do not require users to share their phone numbers or email addresses with service providers.
  4. Protection against Cyber Threats: FIDO passkeys protect against cyber threats such as phishing, man-in-the-middle attacks, and password-based attacks. They provide an extra layer of protection against these threats, helping to keep sensitive user information secure.
  5. Cost-Effective: FIDO passkeys are a cost-effective alternative to traditional MFA methods, as they do not require the use of security tokens or one-time codes.
  6. Easy to Implement: FIDO passkeys are easy to implement and can be integrated into existing systems with minimal effort, making them a convenient choice for organizations in the e-commerce industry.

In conclusion, FIDO passkeys offer several key benefits for organizations in the e-commerce industry, including enhanced security, convenience for users, privacy-friendliness, protection against cyber threats, cost-effectiveness, and ease of implementation. These benefits make FIDO passkeys a popular choice for organizations looking to secure their user information and provide a joyful retail experience for their client base.

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