A monthly forum of compiled insight from top leading industry thought leaders to help you protect your payments and boost your profits
Question of the Month
What do I need to know about online payments fraud in 2016?
February continues to reveal new predictions and forecasts for all things payments in 2016. One overarching theme that will not abate anytime soon is the alarming rate at which online payments fraud is on the rise. Between EMV, the holiday chargeback hangover and emerging payments technologies, CNP fraud continues to increase inline with what experts predicted last year. We’ve done some research on the topic and pulled the best snippets on how to mitigate fraud and chargebacks this year, despite crafty cyber criminals and market forces that drive fraud to the online channel.
Here is what the experts are saying:
- Know your customer. Javelin Strategy & Research predicts that CNP fraud (including online transactions), will eclipse POS card fraud four-fold by 2018. The best way to combat this trend is to implement a layered, tailored, comprehensive fraud prevention strategy that is agile enough to grow and meet emerging threats. One specific tactic includes eliminating checkout through guest profiles and requiring purchasers to securely log in with their own credentials. This can aid in behavioral analytics to sift out “questionable” accounts and ensure that bad actors are shut down before they do damage.
- Utilize 3D Secure Protocols. In a recent fraud report released by The PayPers, Cardinal Commerce points out that EMV will undoubtedly continue to push fraud to the CNP channel where there is low-hanging fruit for bad actors. Combining a comprehensive fraud prevention strategy with the 3D Secure tools offered by the card brands can ensure merchants are on the right side of the liability shift for authenticated transactions and reduce costs associated with manual reviews and interchange rates.
- Emerging payments technology and the Internet of Things (IoT) will increase security risks. Smart devices, wearables and the evolution of the Internet of Things means more personally identifiable information (PII) will be circulating. Given the already difficult job of security sensitive information merchants face, these new technologies will further complicate matters.
More people may unintentionally expose themselves to fraudsters and hackers. The hope is that big names in these technologies will provide ample consumer education on the risks new technologies pose as well as basic information on setting up devices securely and protecting sensitive information.
- It’s not just about increased risk, but more missed opportunities. Merchants who have not upgraded to EMV-compliant terminals will not only be at increased risk for chargeback liability due to counterfeit fraud, but will be at a disadvantage to the EMV-capable competition when it comes to capturing customers who want to use digital wallets and contactless payments. According to Aite Group, “The formula is simple. No EMV = No NFC = No mobile payments.” That’s a potentially big chunk of revenue to miss out on…
This year will bring many new opportunities for merchants who remain a step ahead of the payments (and fraud) game. Leveraging new payments technologies requires an agile payments platform fitted with comprehensive and customizable analytics capabilities. It also requires the layering, testing and toggling of a suite of fraud prevention tools that can adapt and grow as new risks emerge. Merchants need to get back to the basics with 3D secure and other industry best practices to protect online payments.
Emerging payments technology and IoT will aggravate risk and online payments fraud as uneducated consumers find themselves unintentionally offering up valuable PII to nefarious characters. A proactive and thorough approach to fraud and risk mitigation is the best policy this year. Due to the complexities of online fraud and the dynamic payments landscape, working with a fraud and chargeback management partner can make a good business case. Merchants should evaluate their current needs and capabilities and determine the areas in which they may need to augment or completely outsource. Working with a third-party vendor can mean the difference between millions to the bottom line.
Verifi’s Total Chargeback Management solution combines our patented, award-winning Cardholder Dispute Resolution Network™ (CDRN) and Chargeback Representment (CBR) help protect your payments from expensive chargebacks across the entire transaction lifecycle. This comprehensive solution includes a prevention strategy that utilizes real-time notifications to stop unnecessary losses paired with a representment strategy to maximize revenue recovery on chargebacks that make it through. Start 2016 on the right foot and employ a comprehensive fraud prevention strategy that protects payments along every step in the transaction lifecycle.
Don’t forget to download our updated ebook: What Every Card Not Present Merchant Should Know: Navigating Today’s Challenging Payment Ecosystem? Get it now!