What Is the Impact of the GDPR on Online Transactions?

Published on : 06 Apr 2022

Impact of GDPR On Online Transaction


From the first online transaction in 1994, we have seen online transactions evolve faster than anticipated. With this also came an evolution of rules and regulations to avoid the abuse of personal data. The GDPR is one such regulation that has an important role in regulating the whole structure of online transactions. It has also led to the development of specialized fintech cybersecurity.

But what exactly is the impact of the GDPR, and how is it helping? Let us understand all of this in detail and put things into perspective.

What is the GDPR?

The General Data Protection Regulation came into force in 2018. It is a regulation applicable to businesses around the globe dealing with the Personal data of citizens of the European Union. It is an international data privacy law that has brought transformation in the way businesses and organizations process and use personal data. The main aim of the regulation is to ensure the protection of personal data from any form of misuse.

Who Does It Affect?

Any business that operates be it online or offline is affected by the GDPR. Even if a business isn’t directly operating in the EU, it might still have to fulfill the requirements of the GDPR. If you fall under any of the following categories, you are required by law to operate in line with the regulations of GDPR.

  • You deal with the personal data of customers who are residents of the EU.
  • Visitors from the EU access your website and collect/store personal data.
  • Your emails are addressed to EU citizens.

The bottom line is that if the business is handling or dealing with the personal data of EU citizens, then they need to comply with the GDPR.

How Does It Work?

The guidelines of GDPR are pretty straightforward, ensuring businesses maintain the highest level of data privacy and protection. It works by defining certain requirements for organizations to maintain data protection and privacy while processing, storing, and transmitting Personal Data.

Following is a list of all the things covered by this regulation.

  • The GDPR regulation clearly defines what is personal data.
  • How companies should process and protect personal data is one of the core elements of the GDPR.
  • It covers the rights of customers whose personal data are stored processed and used.
  • It also outlines the way how personal data should be secured online.

Impact of the GDPR on Online Transactions

Now that we know what the GDPR Regulation is, let us move on to understanding how the GDPR regulation impacts online transactions. 

What Data is Protected by the GDPR?

Online businesses receive lots of information about their users through online transactions. Out of all this data, only the information that may potentially reveal the customer’s identity is protected by GDPR.

This means companies need to be careful about the names, IP addresses, contact details, credit card numbers, cookies tracking, etc. Even unimportant things like gender, age, and the user’s ethnicity are considered sensitive personal data and need to be secured.

If the seller wants to process any of the said data, they need ‘consent’ from the users. If the user provides consent for the processing of their information, then the business is allowed to use it whatever way it prefers.

What is Data Processing Consent?

Whenever we sign up for websites or simply open a website, we encounter pop-ups requesting consent in one form or the other. It could be a website asking for cookie tracking or a detailed consent form. But that is just one-way organizations ask for consent according to the GDPR.

The standard has set other merits for granting consent as well. Whenever a customer makes an online purchase, they consent to the use of their information; even if there isn’t any special consent form that needs to be filled, this data can legally be used by the seller. Because according to GDPR guidelines placing an order itself is an automatic consent.

Which Data can be Processed?

Every piece of information that allows the user complete anonymity can be processed by the seller. Apart from this, the information acquired after the user’s consent, whether explicit or automatic, can be used by the business.

What Does Data Processing Mean?

When a company receives data that the users consent to, it is allowed to do whatever it wants with that information.

They can save that data in their database, use it to send emails, or even display it. As long as the organization receives prior consent from the user, it can use the information however it wants.

Does This Regulation Apply to Marketing Emails?

As far as the question of marketing emails goes, they are exempted from GDPR rules. This means that the seller doesn’t need consent to send marketing emails.

Article (6) of the General Data Protection Regulations stipulates that companies possess the right to use customer information for legitimate use. Recital 47 has deemed marketing a ‘legitimate interest.’ However, there’s one catch. This exemption holds only if emails are sent to existing customers.

If the business chooses to send marketing emails to new customers, they need consent. A simple checkbox requesting them to be a part of the e-mail list is sufficient. However, the company has to make sure to keep a record of this consent to avoid potential legal action.

So, businesses using customer data for marketing purposes don’t need to worry about the regulations of GDPR too much.

How Do Organizations Protect Data?

Online businesses store a lot of information, including any details a customer provides for purchase in an online transaction. This information needs to be protected due to its sensitive nature.

For this reason, companies are willing to go to all lengths to protect this data. They have special divisions that work in collaboration with cybersecurity companies to ensure data security. These cybersecurity companies specialize in data protection and use elaborate measures to ensure no data leaks occur.

VISTA InfoSec is a widely renowned reputable company that provides cybersecurity consultation to top-notch companies. VISTA InfoSec provides its services to many notable enterprises like HP, IBM, Novartis, Toyota, and Walt Disney, among others.

Final Words

GDPR is a revolutionary set of regulations that ensures customer data isn’t misused. It is clearly defined to make sure no ambiguity or confusion arises in terms of maintaining the security and privacy of data. It is because of regulations like the GDPR that companies take extra measures to ensure data security. With GDPR enforced, companies and customers enjoy a trustworthy and safe relationship.

Narendra Sahoo
Narendra Sahoo

Narendra Sahoo (PCI QPA, PCI QSA, PCI SSF ASSESSOR, CISSP, CISA, CRISC, 27001 LA) is the Founder and Director of VISTA InfoSec, a global Information Security Consulting firm, based in the US, Singapore & India. Mr. Sahoo holds more than 25 years of experience in the IT Industry, with expertise in Information Risk Consulting, Assessment, & Compliance services. VISTA InfoSec specializes in Information Security audit, consulting and certification services which include GDPR, HIPAA, CCPA, NESA, MAS-TRM, PCI DSS Compliance & Audit, PCI PIN, SOC2 Compliance & Audit, PDPA, PDPB to name a few. The company has for years (since 2004) worked with organizations across the globe to address the Regulatory and Information Security challenges in their industry. VISTA InfoSec has been instrumental in helping top multinational companies achieve compliance and secure their IT infrastructure.