Online payment fraud is rapidly expanding. It rose by 285% in 2021 alone as fraudsters took advantage of firms' inadequate fraud defenses and the rising volume of internet trade. It's anticipated that between 2021 and 2025, online businesses will lose more than $206 billion due to risks that are expected only to grow.
Any business working in the digital economy cannot ignore the problem of payment fraud. Companies cannot afford to stagnate in this field by using antiquated tools and risk management techniques. The costs of not handling the hazards are too high, and the threats are too dynamic.
Solutions for payment fraud detection give companies the power to face these difficulties head-on. The most complicated enterprises benefit from the enterprise-grade fraud solution, which enables them to implement advanced fraud management strategies, optimize risk and efficiency globally, and increase revenue.
A payment fraud detection technology that prioritizes three crucial client requirements:
Adaptability: Cutting-edge machine learning uses network-wide data in real-time to identify new fraudulent tendencies.
Responsiveness: Create rules to customize fraud methods for specific targeted segmentation or criteria, leveraging personalized data to create distinctive segments. Utilize approve and disapprove lists to identify trustworthy clients and thwart fraudsters.
Optimization: Robust analytics, monitoring, and testing tools that enhance corporate performance and provide new fraud solutions.
The Continuous Development Of Payment Fraud
Businesses are experiencing severe economic challenges. The cost-of-living crisis is causing a decline in consumer demand, and inflationary pressures in supply chains and wages further reduce margins. More than ever, businesses must make sure that payments enable them to capture every genuine transaction profitably.
However, it's simpler said than done. Due to fraudsters' evolving tactics, businesses are forced to implement stronger risk management techniques. Increased automated attacks, particularly using bots, are one of the biggest trends. Attacks like these make it simple for fraudsters to scale their operations. For instance, with a success rate between 0.2 and 2%, 100,000 account takeover attempts can be made for less than $200.
Additionally, the threat is not constant. Fraudsters target various businesses in various ways. Businesses that provide financial services, e-commerce, airline tickets, and money transfers appear more susceptible to credential stuffing and account takeovers. Bogus accounts, fraudulent advertising, order cancellations, and fake purchaser and seller closed loops are the main threats to online marketplaces. Fake exchanges, wallet takeovers, and Man-in-the-Middle Attacks plague the cryptocurrency industry (MITM). False third-party top-up programs, credential stuffing, account takeovers, and Various Potluck scams are the biggest problems for online gaming enterprises.
A rigorous, one-size-fits-all fraud approach is no longer adequate, which is the lesson for businesses. They are left with two options:
- Emphasize sales hoping that increased volume will offset higher fraud rates.
- Prioritize combating fraud.
- Accept that honest customers will get banned or upset enough to abandon their baskets.
Both strategies are unsustainable and result in lost sales, rising chargeback rates, greater transaction costs, customer attrition, and harm to a brand's reputation.
How Payment Fraud Detection Technology Protects International Enterprises From Fraud?
A firm can customize its fraud solution to match its specific needs and test, learn, and adapt when new risks arise with the help of payment fraud detection technology. Read on.
Decisions that are more informed by billions of data points: Technology for detecting payment fraud is a worldwide system of merchants used to train the machine learning feature on billions of soft and hard data points. It leverages the knowledge it gains from studying actual fraud patterns across various industries and nations to spot and halt suspicious behavior at the point of transaction. Without it, a retailer is more vulnerable to current and new fraud practices because they lack comprehensive knowledge and historical information about these patterns.
Effective Segmentation For Risk Management: Merchants can define policies that suit their risk tolerance thanks to technology that detects payment fraud. An individual business will want to use different criteria for its sales, just as merchants have various risk appetites.
For instance, a business will likely view a repeat customer with the same IP address purchasing a costly item as "safer" than a new customer with an IP address flagged purchasing an inexpensive item. Payment fraud detection solutions for businesses provide the ability to evaluate these two transactions and other segments with various risk categories and develop suitable fraud strategies for each.
It can distinguish between high-risk and low-risk geographic regions, segment by various payment options, or even isolate particular product codes subject to more fraud attempts than others. Merchants can specify what happens when a threshold isn't fulfilled, such as accepting or declining, submitting to 3DS, performing a manual review, and specifying distinct fraud levels for various segments.
With the help of these activities, retailers can stop more fraud or relax regulations to let through more transactions, and they can modify these actions as their risk tolerance changes.
Future-Proof And Improve Fraud Prevention Methods: A payment fraud detection solution comes with various additional features that let businesses expand on their machine learning configuration and optimize their risk management by creating custom rules that specifically address the problems their industry faces, like blocking fraudsters while allowing legitimate customers and streamlining manual reviews.
Avoid Compromising The Client Experience While Battling Fraud
Security should never be the only consideration when combating fraud. It must be a comprehensive strategy that equally protects legal transactions and considers the consumer experience. It enables businesses to balance preventing fraud and safeguarding the consumer experience.
Conclusion: Risk management doesn't have to be exclusively defensive. Instead, it can increase conversion rates by lowering friction for real clients and raising acceptance rates to optimize income.