Negating payment fraud to improve customer experience
The massive wave of digitalisation has now made almost everything possible at the click of a button. From buying products to availing services, customers have shifted to e-commerce websites. This shift has popularised online payments worldwide, with over 90% of consumers using some form of digital or electronic means to conduct transactions. Digitalisation and e-commerce, however, are double-edged swords. As the comfort and convenience of consumers have increased, so has the payment fraud risk for businesses and their customers. According to a study, payment fraud is expected to escalate with a forecast cost of about $40.62 billion in 2027 - 25% higher than 2020.
What is a payment fraud?
A payment fraud is a blanket term for any false or illegal transaction. Cybercriminals committing frauds steal the victim’s personal information and use it to conduct unauthorised payments. This often leads to monetary losses and loss of personal information.
Methods of payment fraud
Fraudsters commit payment fraud by illegally obtaining sensitive information online by means of emails, text messages, pop-up websites with malware, and phone calls. They often impersonate representatives of financial organisations and interact with credit card owners to steal their information. Sometimes, they also use technology to hack security systems by infiltrating the firewall for any possible gaps or glitches in the systems. The victims of payment fraud may experience it in one of the following ways:
Phishing:Phishing is common with websites or emails that demand the users’ private information such as credit card number and PIN, bank account details, login credentials, and passwords. Hackers then steal this information and use it to conduct fraudulent transactions or sell data to other criminals.
- Identity theft: Identity theft has become one of the most common online payment frauds. Fraudsters committing identity theft steal the users’ personal information from e-commerce sites and use that information under false pretences. They steal this information by penetrating firewalls through outdated network security systems or by hijacking user credentials via public Wi-Fi systems.
- Pagejacking: Hackers replicate frequently visited e-commerce sites and reroute traffic and redirect visitors to a different website. Such a site usually contains malware that is used to steal sensitive information.
- Wire transfer scams: Cybercriminals often disguise themselves as trusted vendors and lure credit card users into paying a certain amount as an advance for a product or a service through wire transfers. Once the transaction is completed, they disappear by the time the fraud is discovered.
- Merchant identity fraud: In this type of fraud, to steal money and credit card information, hackers set up a merchant account, which represents a seemingly legitimate business. When the customers raise a complaint, the payment facilitator is held accountable for the losses and fees incurred during chargebacks.
Negating payment fraud
While it is tricky for e-commerce companies to eliminate payment fraud entirely, they can safeguard themselves by maintaining their network security systems. They must ensure that their firewalls and antivirus software are constantly updated to safeguard sensitive business information from hackers.Businesses can prevent payment fraud by taking specific steps, such as:
- Be aware of the latest payment fraud schemes and trends
- Partner with a verified payment merchant or a financial organisation
- Encrypt websites that demand customers’ confidential information
- Change tokens and login credentials regularly
Improved technologies such as machine learning, deep learning, and AI have made anomaly detection tools highly effective in payment fraud detection. AI-driven solutions can efficiently filter out anomalous transactions and detect fraud without compromising on customer experience.
For organisations on the digital transformation journey, agility is key in responding to a rapidly changing technology and business landscape. Now more than ever, it is crucial to deliver and exceed on organisational expectations with a robust digital mindset backed by innovation. Enabling businesses to sense, learn, respond, and evolve like a living organism, will be imperative for business excellence going forward. A comprehensive, yet modular suite of services is doing exactly that. Equipping organisations with intuitive decision-making automatically at scale, actionable insights based on real-time solutions, anytime/anywhere experience, and in-depth data visibility across functions leading to hyper-productivity, Live Enterprise is building connected organisations that are innovating collaboratively for the future.
How can Infosys BPM help?
Our retail and eCommerce payment fraud management solutions incorporate tools such as machine learning, AI, analytics, and automation to offer you comprehensive insights into your business transactions for prompt detection of malicious practices and anomalous activities. Our analytical expertise combined with our technology can help sustain your organisation's revenue and profitability. Our payment fraud analytics framework includes the following solutions: