Digital Payment Fraud: Tips To Avoid Digital Payment Fraud!
Digital payment fraud is considered an inherent risk of online shopping and modes in which credit card payments are involved. This risk has been increasing since the early days of 2020. As the pandemic of COVID-19 advanced around the world, a surge in fraud has followed it around the globe. The most severely hit were businesses putting a full stop to economic activity. As the levels of fraudulent activity rise, so does the advancing of forensic technology such as mobile forensics and forensic accounting. This means it is more likely to return funds and jail the culprit. However, it is not always the case and to prevent the issue from occurring is becoming the goal for many businesses so cybersecurity is becoming vital.
To survive, it became inevitable for businesses to move online and shift to e-commerce. Furthermore, quarantine has left many consumers strongly preferring online transactions. After the instructions of social distancing by world health authorities, contactless transactions are going to be a new normal of the era. But, with all the advancements and shifts, the risk of online theft of information, and digital payment fraud is undeniable.
The scammers and cyber-thieves are also going to look for loopholes in the massive digitalization of businesses. The big question mark arises, Is it safe to make digital payments?
In this article, we are going to talk about tips for customers as well as merchants to battle against digital payment fraud. But, before that, we will have a look at some most common digital fraud happening around the world.
Digital Payment Fraud
The most common digital fraud methods include:
Ransomware is when hackers infiltrate, disable, and hold systems hostage until a fee is paid, usually by cryptocurrency which is difficult to track. Ransomware schemes are increasing with a reported average ransomware amount by a company in Q1 of 2020 as $111,605. The data has shown that an estimated 33% more ransomware events happened during the early months of 2020. The corporate volatility and virtual dealings have resulted in a higher number of ransomware attacks.
Account takeovers, through phishing, spear phishing, hacking, and social engineering have been a plague on the Internet. But, the rise has been seen in almost all regions of the world with an increase of 78% as compared to last year. Account takeovers can happen in case of using a debit card or credit card for online payments.
Consumers are vulnerable to it because the ecommerce segment is a favorite of spammers. Account takeovers leave victims with financial losses as well as the illegal use of their identities.
E-shopping frauds are being reported mostly by the millennials. It includes never receiving items purchased, receiving the sub-standard item, or not receiving what was being shown.
The scammers may attack to get access to your sensitive data. In the phishing scams, you might receive an email looking authentic that contains some payment links. If you click on that link in a hurry and provide credentials or sensitive information, fraudsters might get access to your account and will charge it. Before the victim knows about this fraud, much loss can occur.
How to avoid Digital Payment Frauds?
Different kinds of payment frauds have different risks. In some fraud, only customers are at a loss, but in many cases, merchants are covering losses and suffering financial distress.
What tools are available to help merchants fight fraud? Here are a few tips which might help you to avoid different digital payment fraud schemes:
Use of Artificial Intelligence
In the world of big data and machine learning, artificial intelligence can be a lifesaver. The monitoring of transactions can be done by artificial intelligence to detect fraudulent events. Digital payments can be secured by the use of machine learning to look for suspicious patterns.
Many fintech companies have been employing artificial intelligence in their payment services to avoid payment fraud.
This technique is what will save you even if any spammer has gotten access to your virtual terminal or payment system. If your merchant services provider has a network tokenization service, it allows them to use a one-time token to process a transaction instead of entering credit card numbers. The token has no value outside that one-time event, so you can use a stored card for recurring or future payments without jeopardizing your payment information. To learn more about going down this route, checking out links like https://www.tokenex.com/products/credit-card-tokenization will provide the information needed.
This is another useful technique to secure the digital payment environment. Instead of asking the customer for the mother’s maiden name or first and last 4 digits of id card, biometric verification helps to authenticate the user behind the interface making transaction. Fingerprint, face detection, retina detection, and voice authentication are different modes of biometric verification tools that can be used.
Sound wave technology
It is a disruptive innovation, which is still not common, but it may prove to be an effective safeguard. By the use of sound wave technology, the merchant device will transmit a sound that will be detected by the buyer’s phone and the payment is made securely. This offers high security and is very cost-effective to eliminate digital payment fraud from the online business environment.
Out of the box Information Authentication
If a cyber thief has access to your account information or credit card, the payment can be secured by the use of out of wallet information, for example, when did you change your password last? Or, where did you use your card last time to make a purchase, or the amount of the last transaction? These things will authenticate the behavior of the actual owner, helping to secure payment online.
3D Secure 2.0
3D Secure will prevent any digital payment fraud related to debit and credit cards. These are security protocols created by MasterCard and Visa. It works as a one-time code is being sent to the user’s authenticated number, and the transaction cannot place until the information is verified. Modern payment security methods like EMV chips and network tokenization are effective but may take some time to install. 3D Secure can be rapidly implemented online to provide a safe digital payment environment for your customers.
These are important considerations for securing the digital payment environment for your business. Picking the right merchant services provider can go a long way towards having the right tools available to combat digital payment fraud. A great provider ensures seamless and frictionless digital payment solutions to their customers. No matter if you are a retail clothing store, fitness, veterinary, restaurant, or an ecommerce merchant, you can find a hassle-free solution for your business to process digital payments securely if you keep these important facts in mind.
Hannah Cohen is a Senior Relationship Manager with Host Merchant Services. A graduate of University of Michigan, Hannah has extensive experience in the merchant services industry. At Host Merchant Services, she specializes in working with small to medium sized businesses to streamline their payment processing, reduce costs, and to implement payment technology to enhance customer experiences and drive revenue. She is an expert on the topics of customer service and payment processing trends.