Advancing Digital Wallet Security Through Multi-Factor Authentication and Homomorphic Encryption-Based Privacy Preservation

Digital wallets have been provided by FinTech businesses thus reengineering the financial services but nonetheless there is a possibility of keyloggers, bogus personas and assaults of the server with conventional systems using PIN authentication. The current multi-factor authentication configuration usually leaves sensitive biometric information exposed as the logins are processed. To address these security issues, the paper proposes the MHESecAuth that employs Multi-Factor Homomorphic Encryption and Smart Contracts to authenticate. The permission to make transactions is secure since the system operates with PINs, OTPs and no one can view the biometrics. As per experimental research, the system can be accurate at 96.4 percent, false acceptance rate is 0.08 percent, false rejection rate is 0.6 percent and encryption consumes 160ms. The framework optimizes security, privacy and performance against both MFA, encryption-only and combined solutions and is therefore suitable in the development of quantum-secure digital wallets and still blockchain-based audit and transparency.