Peppol is generally a very secure way to exchange invoice data digitally from one company to another. It’s much ‘safer’ than channels like e-mail or paper invoices to protect against threats, because it uses certified access points and standardised protocols. But it’s not perfect.
Peppol protects the data while in transmission, but it doesn’t verify the bank account data itself. This leaves firms vulnerable to payment fraud risks like vendor and invoice fraud. Learn about how to ‘top up’ the security already in place while using Peppol and why you may need specific supplier bank account verification and monitoring through Trustpair.
Is Peppol Secure: Key Takeaways:
- Peppol is an international network and digital system for data transmission, and electronic invoicing is typically the most popular type of data exchanged through the network
- Peppol has strong in-built security for the data in transmission, but lacks verification for the payment data within invoices themselves
- To use Peppol and meet the highest security standards, consider setting strict data controls, verifying bank information, continuous monitoring and segregating duties
What is Peppol and how does it work?
Peppol stands for the Pan European Public Procurement Online. It’s a network that was built in 2008 in order for institutions to exchange electronic documents securely in a way where the data integrates directly into the sender and receiver’s systems without manual input. It meets the EU’s e-invoicing compliance standards, so is therefore essential in many EU countries, often made mandatory by governments.
Peppol works on a four corner model based on access points. These are certified and secure service providers, similar to how a phone network provider grants access to service in particular areas.
Here’s how it works:
- The sender sends their electronic document to their Peppol access point
- The sender’s access point connects with the recipient’s Peppol access point, sending the document to it
- The recipient’s Peppol access point forwards the document on to the recipient
This has advantages; it means that no matter which internal systems the sender and receiver use, they align. There’s no need for extra integrations, manual data input or interventions to receive invoices.
When it comes to structured invoice exchanges, the data must be formatted in a specific way to meet Peppol rules (and therefore successfully work). This aligns with EN 19631, and includes:
- Universal business language format (machine-readable XML code)
- Buyer and seller electronic address identifier inclusion
- Schematron validation
- And many more!
It ensures that the sensitive information included in sending e-invoices via Peppol are both secure and machine readable, and that every participant operates properly.
How secure is the Peppol network?
Peppol is generally a very secure network because it is encrypted, with an access barrier and participant identity verification. Plus, because it works under European Commission regulations like Directive 2014/55/EU, invoices created for e-invoicing in Europe must meet EN 16931 compliance standards at the very least.
Individuals cannot just register on behalf of their companies – each application to a certified Peppol Access Point requires verification. This is typically done by following Know Your Customer protocols, which includes the request of identity documents, for example. Because Peppol is a ‘connect once, reach all’ network, this step is supposed to guarantee that any new entrants (which could be your suppliers or customers) are who they say they are. Otherwise, every other network member is theoretically at risk. Generally, it works very well for digital invoicing and other documents.
The network is also encrypted so it’s well-protected against cyber attackers such as hack attempts, code injection and malware. This uses the AS4 protocol, encrypting messages to guarantee confidentiality, and is likely to continue evolving in the future, alongside threats.
OpenPeppol even went as far as creating its own governance framework, with its latest version covering:
- service provider standards and standard format for documents
- operations procedures, including automation, like migrating to the system
- regulations for users of the network, and more
What are Peppol’s security limitations?
While Peppol has thoroughly considered its security, it’s not completely infallible. For advanced cyberattackers, the Peppol network was not built to protect against scenarios like:
- Fraudulent supplier onboarding: when entities misrepresent who they are or what they can do for your business
- Manipulated bank details: if ‘legitimate’ invoices from clients are intercepted and the bank details are changed
- Internal process weaknesses: such as poor access management controls or failure to properly verify suppliers during onboarding due to human error
- Payment fraud outside of the invoice transmission layer: if your users fall victim to social engineering schemes like phishing, for example
The truth is that even inside the Peppol network, vendor data risks are still present. And due to the ‘connect once, reach all’ principle, this vulnerability is amplified. While Peppol ensures secure transmission, it does not guarantee the authenticity of the invoice content or the sender if identity verification is weak.
How to strengthen security beyond Peppol
Teams can apply several measures to improve their security and continue to use Peppol. Best practices include:
- Setting strict vendor master data controls
- Verifying bank account information
- Continuously monitoring suppliers for information change
- Segregating duties internally
Setting strict vendor master data controls
A zero-trust environment is key when setting up your data controls, whether they focus on vendor data specifically or your more general workflows. The ‘never trust, always verify’ mindset enables firms to set a culture of control throughout the business, and do so as standard.
Here are some examples of vendor master data controls to implement to secure the business beyond Peppol:
- TIN matching: validate vendor tax IDs against official records to eliminate IRS penalty risk and vendor impersonation fraud before a single payment is made
- Write once, read many (WORM) protocols: prohibiting any modification or deletion of the recorded data
- Multi-factor access controls: requiring two or more independent factors of a) knowledge (password), b) possession (token/phone), or c) inherence (biometrics) to verify user identity
Verifying bank account information
Organisations can go beyond Peppol’s basic security system and upgrade it by verifying supplier bank account information. To do this, a verified source is crucial to compare the details given by the supplier upon onboarding.
Software like Trustpair works to verify bank information, providing proof of bank account ownership in real-time. It ensures that an account is held by the correct individual or entity by cross-referencing details such as bank account number, owner’s name or number, from account holders across the globe. With smarter fraud detection, our algorithm can spot patterns that traditional methods miss.
Learn more about bank account verification with Trustpair.
Continuously monitoring suppliers for information change
Preventing access to fraudsters during the due diligence and onboarding process is incredibly worthwhile, but how can firms continue to protect themselves as the data changes?
Each time a vendor updates their address, bank account details or point of contact, the system is exposed to vulnerabilities. To truly say goodbye to outdated information fields, continuous monitoring is the answer. Firms can react immediately as they discover changes in real-time, spotting errors and restoring a clean database. And with Trustpair’s customisable rules, you can even automatically block payments when a suppliers data become suspicious, fraudulent or outdated.
Segregating duties internally
The segregation of duties can also help firms move beyond Peppol standards and into higher levels of security. By following the four eyes principle, teams can ensure that at any one time, at least two separate members have access to decisions internally. It leaves no room for a rogue operator to commit internal fraud, and makes teams more likely to spot unintentional mistakes, too.
Peppol network security and beyond
Peppol is an e-invoicing system primarily used in Europe. While it has been built with security in mind, advanced fraudsters can circumnavigate these defences to expose businesses. To protect against threats like supplier impersonation and invoice fraud, companies should set strict controls and use dedicated payments software like Trustpair.
