Within the past decade, we have watched as fintech platforms and firms took the global financial industry by storm. Basically, they have revolutionised every aspect of finance, including online money transfers, savings, investment, and payments, with various digital solutions.
Clearly, the market for digital financial services is bubbling. And as it continues to grow, the good and bad actors will also find their way in. This much is also evidenced by an increase in fraud, identity theft, phishing, and other emerging threats in finance.
These threats call for an increasing need for consumers to take precautionary steps to protect themselves when interacting with digital financial services.
With two-factor authentication (2FA), which requires two forms of unique identification before one can access your account, you’d be able to protect yourself from some of the most common threats associated with online money transfers and other financial services.
What Is Two-Factor Authentication (2FA)?
Two-factor authentication is basically a type of management security system that provides an additional layer of security on your account to ensure that only you can access your account or complete a transaction using your account.
Where a single-factor authentication may only request your password, a 2FA will request your password and another type of authentication factor, such as biometrics (facial recognition, fingerprint), one-time password (OTP), CVV checks, and even device verification.
Depending on the provisions made by your financial institution, you may be able to use a combination of the above-listed factors to secure your account and send money safely around the world.
How 2FA Works in Online Money Transfers
One can argue that two-factor authentication is now an inherent part of online money transfers. From when you attempt to log in to your account to when you complete your transaction, you will encounter multiple requests for authentication factors.
Here’s how it generally works:
- At login:
- Initial prompt: You will get a prompt to input your username and password.
- 2FA prompt: You will get a prompt for the second form of authentication (attached to the account), which could be biometric or an OTP.
- Access: Once you complete the requirements, you will get access to your account.
- When completing an online money transfer:
- Initial prompt: After filling in your transaction details, you will get a prompt to fill in your transaction PIN to authorise the transfer.
- 2FA prompt: Depending on your account settings, the type of transaction you are doing, or the amount you are sending, you may get an additional prompt for a second factor authentication, typically an OTP or CVV check.
Given its importance, any reliable money transfer service provider knows to embed a reliable 2FA system across its services. For instance, if you want to send money to Colombia via BOSS Money App, you will get multiple prompts both at login and when completing your transaction to input various unique authentication factors.
Why Two-Factor Authentication Is Important
Below are a few reasons why 2FA matters.
Defense Against Fraud and Phishing Attacks
2FA restricts unauthorised access to your account. Some financial fraud and phishing attacks often start by tricking a user to reveal their login details, which the fraudster or attacker then uses to gain entry into their account.
Online money transfer services with 2FA often counter these attempts by requesting a second authentication factor, which only the real account owner should be able to access and/or provide via their personal device to approve the login attempt.
Securing Large or Cross-Border Transactions
Money transfer platforms automatically detect large transactions and international transfers as unusual activities on users’ accounts. Therefore, when such transactions are initiated, money transfer services usually send an OTP to the account owner’s mobile device to confirm that the transaction is coming from them.
This limits fraudulent transactions while equally enabling real account owners to authenticate their international transfers and substantial transactions more securely.
Regulatory Compliance
Financial institutions implement 2FA as one of the key customer-facing tools for meeting various national and global regulatory requirements, especially data security and protection compliance. Those that don’t implement it across their networks and services put their customers at great risk.
Risks Without 2FA
Financial institutions experience some of the most aggressive cyberattacks, resulting in millions of sensitive user data being exposed annually, worldwide.
When users’ accounts are exposed, malicious actors often use bots to forcibly access user accounts at scale. In more concentrated attempts, the attempts may be manual. Where successful, these attacks could result in stolen funds, identity theft, and even blocked accounts.
Now the question is: how can you maximise 2FA to secure your online transfers?
Tips for Using 2FA Effectively
First things first, it is important to note that 2FA is not some catch-all security system securing your transfers. It is only one part of the process of restricting unauthorised access to your account.
That said, here are a few tips for maximising two-factor authentication:
- Authenticator apps: Authenticator apps add an extra layer of security atop the layer of security already offered by your financial institution’s platform. Use authenticator apps over SMS when possible, as they are generally more secure.
- Unique passwords: Always generate unique passwords for each of your accounts/apps, to avoid malicious actors using a single password exposed in a breach to attack your other accounts.
- Secure your backup codes: If possible, keep your 2FA backup codes entirely offline in a physical location, like a locked safe. If online, secure it in a password manager with strong encryption.
- Not you? Don’t approve: Never approve a long attempt you didn’t initiate.
Conclusion
Two-factor authentication is a simple yet effective way to protect online money transfers. This article is your cue to review the account security settings on all financial platforms and activate 2FA on any account still stuck with single-factor authentication.
Finally, security is a shared responsibility between users and providers. As you prepare to secure your financial activities going forward, make sure to choose only providers with extensive security systems, including 2FA.
