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5 Benefits of Using Two-Factor Authentication (2FA)

two-factor authentication

Protect your business and your customers from online fraud with two-factor authentication. Learn the benefits of using 2FA for fraud prevention here.

With 2FA, you can offer your clients and employees secure and convenient payment and data processing, thanks to multi-layered data encryption and file protection.

With cyber fraud on the rise, app developers and service providers have launched two-factor authentication to bolster online security, as 2FA can prevent nearly all unauthorized account login attempts. Also referred to as two-step authentication or multi-factor authentication, this security measure can prevent the large majority of unauthorized login attempts.

According to the FBI's Internet Crime Complaint Center, internet crime resulted in a staggering $6.9 billion in losses in 2021 alone. The most common internet crimes are phishing or pharming schemes which racked up over a third of that damage, totaling nearly $2.4 billion.

In this article, you will discover how 2FA offers a range of benefits for businesses and their clients.

What is Two-Factor Authentication?

Passwords are no longer very effective in securing digital information. At first glance, passwords seem relatively secure. But in practice, they do very little. Considering how 100 million accounts use ‘123456’ or ‘password’ as their login, hacking account information is a breeze for cybercriminals.

In contrast, two-factor authentication adds an additional security layer to prevent cybercriminals from accessing sensitive information, even if they do obtain a password. In addition to a username and password, 2FA also requires the user to enter a private one-time access code. This code serves as a second security identification measure before granting access. This security feature is essential for modern businesses to monitor and safeguard their data.

Understanding How Two-Factor Authentication Works & How To Use It Effectively

Many businesses and individuals understand the value of two-factor authentication when it comes to high-value information like financial accounts. But the truth is that you should be using 2FA whenever it’s an option. Criminals are looking to access personal and business data as much as finances. And as a business, you are responsible for keeping all of your client's information safe. You need to offer customers a safe way to use your services without putting their (or your) sensitive data at risk.

Using the same form of authentication (such as a password and your first pet's name) for both verification steps does not constitute two-factor authentication. Both of these methods are known as knowledge factors, classifying this as single-factor authentication. For multi-factor authentication to be effective, access credentials need to include factors from two different categories. You might use a possession, biometric, location, or time factor, for example.

The possession factor is the most popular second-step method in use for most 2FA applications. This involves something only the user has access to—an ID card, mobile device, smartphone app, or security token. Meanwhile, a biometric or inherence factor involves physical characteristics such as a fingerprint, facial or voice recognition, or speech patterns.

The majority of 2FA systems rely on knowledge, possession, and biometric factors; however, you could also use a location factor, which limits authentication to specific devices in certain locations, or a time factor, which only permits access for a restricted period of time.

Enabling two-factor authentication will vary according to vendor applications; however, the overall authentication process is similar across the board. After the user enters their login with a username and password, the server matches the user to their profile. The user is then prompted to verify their identity with the second log-in step. The system will, for example, generate a code and send it to the user’s mobile device. After entering this one-time code successfully, the user can access the account.

How Can Two-Factor Authentication Help Your Business?

Many people still believe 2FA is just an extra hassle, rather than just using the same password across accounts. This couldn’t be further from the truth. Two-factor authentication bolsters security, but also can make sign-on simpler. In an age of increasing cybercrime, using it should not be negotiable.

1. Prevent Fraud and Identity Theft

Identity theft can take place in a variety of ways. A hacker might tap into a user's personal account, for example, or gain access to a whole business database. Medical, eCommerce, government, and financial institutions are all popular targets since there are repositories of all types of personal information.

For example, since health care portals send electronic records and contain a host of provider and patient information, health providers have become a major target for hackers. Passwords alone are no longer sufficient barriers to keep cybercriminals from gaining access to this critical data.

The growth of eCommerce also presents many new fraudulent opportunities for hackers. Account takeover has become the biggest fraud threat for online vendors; eCommerce websites are frequent targets for large-scale attacks since hackers do not need to be physically present to execute online fraud. Sales fraud and fake charges are costly for companies since they need to issue scam refunds to customers.

By implementing two-factor authentication, businesses can establish a reputation as trustworthy and secure partners—while also improving their bottom line.

2. Streamline the Login Process

To keep account access convenient while remaining secure, businesses can generate one-time passwords (OTPs) to serve as a secondary authentication measure.

An OTP is a random sequence of letters and/or numbers received via SMS, email, voice message, or push notification. Since an algorithm creates each time-sensitive code randomly, they are extremely difficult for hackers to guess. In addition, the code is only valid for a short period of time, further limiting the hacker's window of opportunity.

OTPs also reduce password fatigue. Not having to continually create and remember new passwords reduces frustration and wasted time trying to remember and reset passwords. Additionally, this reduces the time IT help desk staff have to spend resetting lost or stolen passwords. Two-factor authentication and OTPs make user verification simple, fast, and easy, without compromising security.

3. Two-Factor Authentication Increases Customer Trust

With internet fraud so abundant, data security is at the forefront of consumers' minds—especially when they share personal and payment information online. Whether it’s medical and educational platforms or making purchases, customers want to know that they can trust a business with their information.

Even though additional verification steps can seem like a hassle, two-factor authentication improves customer experiences and solidifies your business’s reputation as a trustworthy partner. Safeguarding employee information—especially in healthcare, education, finance, and government—is essential; customers who do not feel that their information is safe will not hesitate to seek solutions elsewhere. The increased security also gives businesses confidence in the services offered to clients.

4. 2FA is a Step Toward a Passwordless Process

Passwordless verification replaces passwords with more secure authentication measures. As already discussed, biometrics and possession factors are largely used as verification measures; however, magic links offer another method. With a magic link, the user enters their email address in the login platform. The system then sends the user an email containing a time-sensitive verification link, which then gives the user access.

Most users default to using the same passwords or choosing an easy-to-remember (and therefore easy-to-steal) password to simplify matters. But this is detrimental to data security, letting hackers into multiple accounts by cracking a single password.

Two-factor authentication is, therefore, an essential best-practice measure for emails, financial, social media, and eCommerce accounts. Going passwordless eliminates the need to remember or generate passwords, and ensures that cybercriminals cannot hack accounts based on simple password theft.

5. Reduce Operational Costs with 2FA

Online fraud can cost your business a lot of money. Whether it’s a breach of customer data, account takeovers, false charges, or account theft, businesses are often the ones who have to compensate customers for their losses.

In addition, tracking and notifying customers of suspicious activity is costly in terms of time and money. Implementing payment security features reduces fraud—and thus all the costs associated with such crises. This also reduces the time help desk staff spend tracking and reporting fraudulent cases, so they can focus on more complex customer concerns.

While setting up two-factor authentication does require an initial investment, it can save you and your customers in the long run—not only financially, but also in terms of your reputation.

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Partner With NatPay to Increase Business Security for Your Customers

Considering how rampant online fraud and identity theft are these days, it’s almost unthinkable that anyone would willingly make themselves or their clients vulnerable by not implementing top-notch data security measures. And yet too many companies and individuals continue to operate with paltry password systems that leave information ripe for stealing. It’s time to upgrade your sign-on security!

NatPay has operated as a leader in secure payment processing for over 30 years. From tax payments and expense reimbursements to invoicing and secure document delivery, NatPay’s secure online systems incorporate the latest technology to simplify and safeguard all your financial transactions. Direct Deposit Plus lets you upload payroll files from any computer, with emergency processing features, text alerts, and multiple timing options. You can offer your clients and employees secure and convenient payment and data processing, thanks to multi-layered data encryption and file protection.

Contact NatPay to start protecting your business from online fraud today.