The dynamic development of real-time payments means that the world is experiencing a significant increase in fraudulent online transactions. According to NFC World, accelerating the billing process makes fraud prevention more and more difficult. Detection of irregularities within a few seconds seems to be a big challenge for banks and payment providers. The above mentioned service adds that this increased risk can be clearly seen on the example of Great Britain, where payment frauds were doubled in three years from 2013, and increased by another 270% over the next six years.
Fraud and data leakage
Payment Fraud, or fraud involving payment fraud is often referred to one of the most serious threats faced by todays eCommerce businesses. What does it consist of? To simplify, fraud occurs when payments for goods or services are made by an unauthorized person. In practice, it is usually a transaction made by a fraudster on the Internet using a stolen payment card or a stolen data: its card number, name and surname of the holder, expiry date and security code (so-called CVV). Almost every day the media report data leaks from databases of various types of organizations – including large online stores or financial institutions. According to Gemalto, every minute around the world from many different institutions, leaks nearly 3.5 thousand personal records.
Why is it so dangerous for eCommerce?
Although, the mechanics of payment fraud are similar in all segments of online commerce, the specifics of the phenomenon – and thus what motivates fraudsters and directly implies the way they operate, fundamentally differs in different market areas.
The report prepared by EY clearly shows that among the 150 e-commerce companies analyzed, whose annual turnover in online commerce is at least € 100 million, up 71%. does not use any technological solution to protect against fraud, and only 35 percent. has any procedures to prevent excessive costs associated with chargeback. Broadly understood, the digital goods and services industry is the most vulnerable to payment fraud. The average value of a single transaction is relatively low in the digital goods segment, while the number of transactions carried out in almost any unit of time is high. The above conditions favor the automation of scams by using bots and mass transactions.
Chargeback protection & 3D Secure
Protecting your online store will help you reduce the risk of chargebacks. By using 3D Secure and other anti-fraud tools, you can protect real card owners and your site against card fraudulent use. This will prevent long and problematic disputes regarding payments and chargebacks.
Knowledge is a power – Unfortunately, regardless of the security measures used, we often run the risk of losing funds ourselves. Many Internet users are deceived by suspicious links, emails or messages that they receive from anonymous recipients.
Hire risk manager – It is not difficult to guess that in the era of rapid development of new technologies, many solutions have developed on the market to support business in protecting against fraud. In almost all markets where cards dominate, the fight against cheaters is the responsibility of risk managers. These are people with specialist knowledge of how Internet criminals operate and online commerce.
Technology – Companies using technical solutions to minimize the risk of fraud constitute of only 34% of the surveyed population. These companies simultaneously apply rule-based and machine learning solutions. Therefore, it can be seen that the new generation solutions are just gaining popularity among companies with a high degree of awareness of the fraud problem.
Biometry and identification – Currently on the market there are solutions that use deep, multidimensional user profiling, as well as advanced machine learning. The profiling tool is able to deeply “x-ray” every user of the online store or native application, while collecting thousands of data points characterizing its hardware, software, network environment and behavior in interaction with the website.
Protect the customer data – You do not have to store any card sensitive data on your system. If you activate recurring payments, there are some technological solutions to help you secure all the details of your customers transactions and encrypt them for better security.
Trends year by year
Comparing trends to last year, security becomes number one because it is the foundation of customer trust. In addition, it can be quite expensive for business, if we don’t take care of it.