7 Common Cybersecurity Vulnerabilities in Payroll Software and How to Fix Them

Payroll software plays an important role in employee compensation and making sure that accurate payments are processed. From calculating salaries to managing administrative tasks, payroll systems are open to vulnerabilities in payroll software that can risk financial data. 

The problem is that payroll departments are always storing sensitive information, which include an employee’s bank account details, health care information and much more. Employees will always be prone to facing ongoing attacks from cybercriminals. Recently, there have been more than 4.5 billion cyber attacks and many of them are to be concerned about. 

We’ll be diving deeper into this article to learn more about the cybersecurity vulnerabilities in payroll software and how you can fix them. 

1. Weak authentication mechanism issues 

Some of the main vulnerabilities in payroll software is having a weak authentication mechanism. If the system is lacking robust authentication, it becomes much easier for cyber attackers to gain unauthorized access to sensitive data. 

Unauthorized access can come from weak password policies and even social engineering practices. They not only can steal employee information, but also change banking information as well. 

In order to fix this vulnerability, organizations can always implement proper authentication practices. This includes multi-factor authentication (MFA), strong password policies, and asking employees to regularly update their passwords. 

MFA doesn’t allow someone to access sensitive information unless they complete two or more user authentications. Moreover, we have strong password policies, which are increasingly important for each organization to implement. The last thing you want is to have weak passwords in play. They make you an easy target and will give cyber criminals more space to attack you again in the future. 

If you’re concerned about your password strength, you can use a strong password generator to give you passwords that are nearly impossible to breach. You can also use a password strength meter that tells your users how powerful their password is. 

2. Not educating your employees 

If there’s one major problem within an organization, it’s avoiding educating employees on the approaches they can use for preventing online attacks. Did you know that human error is responsible for about 38% of data breaches

This means that nearly half of data breaches occur due to employees being unaware of them. This isn’t great news, but there’s a solution to it for sure. The most common method for cyber criminals to access payroll data in modern days is to do so through phishing. Most of these attacks are known when an employee sees that their wage is not paid. 

Good practices you can take to stop  these type of attacks are: 

  • Limited access to sensitive information in the Human Resource and Financial sectors for employees who don’t need that type of information. 
  • Set up anti-phishing campaigns to educate your team and tell them to forward all suspicious emails. 
  • Set up security policies that educate employees further on what they need to avoid and report. 

Online attacks don’t always occur from external factors, but can happen in the internal team as well. There might be an internal member who wants to do damage to the organization and will start hijacking sensitive information. That’s why it’s always important to educate other team members and tell them to report suspicious activity soon. 

3. Not using reputable payroll systems 

Using reputable payroll software is important if you want to have routine software updates and patches for fixing vulnerabilities. Payroll software companies that are reputable will usually have a track record of securities in compliance with industry rules that are chosen by some businesses. 

There are also many businesses that will pay employees with token payroll. A global token payroll and tax compliance solution is excellent for organizations that pay employees or contractors by using tokens and fiat. This is great for keeping your payments secure and preventing phishing attacks from online criminals. 

4. Avoiding to conduct regular checkups 


Monitoring your payroll security level is highly important if you want to be successful in preventing future attacks. When you leave things behind, online attackers will know it and it’ll be easier for them to take advantage of your sensitive information. Here are a few techniques you can use for strengthening your payroll security strategy: 

  • Physical security: Keep your physical records in a secure location and only accessible to authorized team members. 
  • Use Virtual Private Networks (VPNs): VPNs include an extra layer of encryption when you access payroll systems remotely. This is important for hybrid and remote work environments. 
  • Continuous software updates: It’s important to keep your devices up-to-date with the latest technologies and patches. Outdated software is a free ticket for online attackers to get a hold of your information. 
  • Disk encryptions: All the devices you use should have disk encryption, so you make sure that your data is protected even if you lose your devices. 
  • Special grant access: This accounts for each team member. Only those who need certain sensitive information should have access to it. Otherwise, they shouldn’t be able to access it. 
  • Payroll security audits: Conducting continuous checks on your user activities, payroll records and transaction logs. They use these for detecting unauthorized or suspicious activities. 

Don’t miss out on any step, make sure you are implementing all of them and performing regular check ups and allowing your team to update you regularly. 

5. Lack of data encryption 

Another vulnerability in payroll software is the lack of data encryption. Payroll systems will manage highly sensitive data, such as bank account details, employee salary records, social security numbers, and more. If this data isn’t properly encrypted, it’s easy for it to escape in the wrong hands and to unauthorized users. 

In order to address this vulnerability, organizations need to ensure that all the data is encrypted at transit and rest. Powerful encryption algorithms include: 

  • Advanced Encryption Standard (AES) 
  • Secure Sockets Transport Layer Security (SSL/TLS) 

These protocols are excellent for protecting sensitive data from any unauthorized access. Overall, data encryption protects data by making it into an unreadable format that gets decrypted with the right keys. Updating these encryption mechanisms and monitoring the industry’s top practices for encryption standards and staying ahead of any emerging threat. 

6. Avoiding direct deposits and outsourcing 

Especially for smaller businesses, direct deposits and outsourcing offer a wide range of safe payment options. They’re also great for expertise and don’t require you to hire any high-paying salary in-house staff. 

Other benefits of outsourcing include:

  • Time-saving: Saving time is what allows you to invest time in your business. It gets rid of all the pressure you have with staying updated on security measures, tax codes and more. 
  • Security: Payroll service providers always follow industry-standard security protocols and offer you a peace of mind. 
  • Expertise: Specialized payroll services that bring a good level of experience to your table and ensure that your payroll is professionally being managed. 

You are getting tons of benefits alongside, so never avoid direct deposits and outsourcing. 

7. Not backing up your data


Another common mistake many organizations make is not backing up their data. It’s important you check that your payroll software has automated data backups. This ensures that your business is operating at a peak level and in case you accidentally lose data, you still have it safely stored somewhere else. 

96% of organizations don’t back their data up regularly. This isn’t a good sign because it makes cyber criminals more prone to making continuous attacks on organizations and even coming up with new methods on how they can steal your sensitive information. 

The good news is that when you back up your data, you are distinguishing your business from your competitors. Statistics showed us that many organizations don’t pay too much attention to backing up their data, so it’s important you do so. 

There’s always a way to fix vulnerabilities in payroll software 

We showed you the vulnerabilities you are likely to encounter with your payroll software and how to be prepared for it. It’s now your turn to include them in your strategies and make sure you are prepared for any sudden attacks. 

Set up strong password policies, use two-factor authentication methods, educate your employees to know when to report some unsuspicious activity. Moreover, always update your software and make sure that you are not missing a single one of them. 

Don’t forget to encrypt your data and set up a backup plan. Follow all these steps and you’ll be ahead of your competition. After all, it’s not that hard to do! 


The Author: 

Tony Ademi is a freelance SEO content and copywriter. For roughly four years, Tony has managed to write more than 500 SEO-optimized articles and most of them have ranked #1 on Google. When writing, Tony’s main focus is to carefully do research and make sure that his content is high-quality.