4 Secure Payment Technologies Every Merchant Should Know
Digital payment security is rapidly evolving, driven by advancements in tools like multi-factor authentication, tokenization, point-to-point encryption, and artificial intelligence (AI). For merchants, staying informed about these payment technologies is critical to protecting their businesses and their customers from malicious actors.
Read on to learn about four of the latest technologies that are helping merchants stay ahead in the fight against fraud.
1. Multi-factor authentication
As cybercriminals continue to adopt advanced technologies to target businesses, traditional password-based security is no longer sufficient. Multi-factor authentication has emerged as a critical tool for safeguarding sensitive information and protecting online payment processing systems. It works by asking users to authenticate their identity in more than one way before access is granted.
This layered security approach combines multiple factors to create a stronger defense, making it harder for attackers to gain unauthorized access.1 One such solution is ProtectBuy® from Discover® Network, a Three Domain Secure (3DS) customer authentication tool that ensures secure transactions across multiple types of devices including mobile, desktop, and gaming consoles. ProtectBuy works at the moment of purchase to validate consumer identity between Discover Network, merchants, and issuers. If a transaction is challenged, a one-time-use password is sent to the cardholder in near real-time. The authentication communication travels across the three networks within a matter of seconds to avoid shopping cart abandonment while ensuring the sale is not fraudulent.
As a member of EMVCo, Discover Network participated in the development and evolution of EMV® specifications, including 3DS. The speed and security delivered by 3DS solutions like ProtectBuy are notable benefits for merchants processing both cross-border and Card-Not-Present (CNP) transactions, both of which can be targets of fraudsters.
2. Tokenization
Tokenization has become a cornerstone of modern secure payment technologies. It works by replacing sensitive data like card numbers with unique tokens that cannot be reverse engineered. This process not only protects sensitive information, but also ensures smoother and more secure transactions for both merchants and consumers.
Merchants can also use tokens to securely store customer payment information for future use without exposing sensitive data.2 In this way, merchants can safely offer features like one-click checkout, subscription billing, and recurring payments without risking exposure of sensitive cardholder information.
As cyber threats become more sophisticated, tokenization is essential for reducing fraud risk and enhancing customer trust. Advanced tokenization solutions like Stored Payment Tokens from Discover Network enable merchants and payment service providers to store customers’ tokens instead of sensitive account information. In the event of a data breach, customer data is secured. Additionally, when customers are issued new cards, they don’t have to type in their card info again because it automatically updates, resulting in less payment breakage and cart abandonment.2
3. Point-to-point encryption
Point-to-point encryption (P2PE) is a payment security method that encrypts account data from the moment a payment card is accepted to the point of secure decryption.3 Although P2PE has been available for some time now, it has recently become an essential payment security technology as digital payment systems face increasing cyber threats.4
P2PE secures every step of a card transaction—verifying funds and transmitting approvals or denials—by encrypting the data throughout the entire process.5 This protection can help businesses reduce the risk of data breaches, financial penalties, and reputational harm.
4. AI
AI is emerging as a powerful tool for combatting fraud because it enhances payment security through anomaly detection and continuous learning. By analyzing vast amounts of data in real-time, AI can identify unusual patterns that can be indicative of fraud.6 What’s more, machine learning models use continuous learning to adapt quickly to new threats, improving fraud detection over time.7
In a recent interview, Kate Lybarger, Head of Payments Innovation at Discover Network, explained why AI is an increasingly important aspect of fraud detection.
“The introduction of generative AI and how that has definitely intensified the fraud conversation, and how we think about using AI in interesting ways—it's all about helping to protect the customer,” Lybarger said.8
She added that while various iterations of AI have been impacting the payments landscape for decades, it had mostly been the domain of the data science community until generative AI was made widely accessible to the public in late 2022. For the payments industry, this has emphasized the importance of security for merchants and consumers who need to know that their financial data and transactions are protected.
Although AI in the hands of malicious actors can pose threats to payment security, its capacity to monitor behavior and data patterns makes it one of the strongest tools for detecting cybercrime. In fact, the global AI fraud detection market is projected to grow to $31.69 billion by 2029.7
“When you talk AI you are talking about working with a mass amount of data and the challenges of working with those volumes of data are significant,” Lybarger said. “Getting it wrong has very severe implications. It’s important that you don’t entirely rely on these solutions, but you are thinking about how humans are still involved and validating behind the scenes.”8
She adds that in the payments industry, what remains constant is the need for security.
“Consumers want to feel safe and they want their credit and debit cards to work wherever they are, whenever they need them to,” Lybarger said. “That need for security and peace of mind will always be at the forefront of how we think about and test AI solutions.”8
Staying ahead in payment security
Keeping up with the latest advancements in digital payment security enables merchants to invest in the right technologies and maintain the most effective protections as the landscape evolves. By adopting the latest solutions, merchants can help safeguard their businesses and their customers from data breaches—ultimately helping to prevent financial losses and foster consumer trust.
Discover Network offers a comprehensive suite of security solutions. Explore solutions designed to protect merchants from fraud and data breaches.
- Camelia Kamaruddin, N.H., Fadli Zolkipli, M. The Role of Multi-Factor Authentication in Mitigating Cyber Threats. (2024, December 16). Borneo International Journal, 7(4); 35-42.
- Discover Global Network Stored Payment Tokens. Retrieved 2 May, 2025.
- Security Standards Council. Point-to-Point Encryption (P2PE). Retrieved 2 June, 2025.
- PYMNTS. (2024, September 27). Making Sense of How Point-to-Point Encryption Protects Payment Data. Retrieved 2 June, 2025.
- Worldpay. Deciphering payments security lingo: What is P2PE? Retrieved 2 June, 2025.
- The Business Research Company. (2025, January). AI in Fraud Management Global Market Report 2025. Retrieved 2 May, 2025.
- Lalchand, S., Srinivas, V., Maggiore, B., Henderson, J. (2024, May 29). Generative AI is expected to magnify the risk of deepfakes and other fraud in banking. Deloitte. Retrieved 2 May, 2025.
- Discover Global Network. (2024, June 4). How AI and Machine Learning Are Battling Global Financial Fraud. Retrieved 2 May, 2025.
The information provided herein is sponsored by Discover® Global Network. It is intended for informational purposes, and is not intended as a substitute for professional advice.