Online transactions around the world have increased largely due to the COVID-19 pandemic where most people stay home. This is no different in Southeast Asia, where the e-commerce sector grew 63 percent to reach US$62 billion in 2020. By 2025, online retail is projected to reach US$172 billion.
With more online purchases comes an increased risk of fraud incidences. Last year, card not present (CNP) fraud cost companies $35.54 billion worldwide. Specifically in Southeast Asia, the rate of attempted fraud is up to 12 times greater than the global average, and online merchants lose an average 1.6 percent of revenue to direct fraud each year.
With the threat of payment fraud accelerating faster than ever, it’s important that merchants stay vigilant and ahead of emerging fraud trends. Here are five ways to protect businesses from fraud attacks in 2021.
1. Use smart authentication
It’s easier to make good decisions about transactions when you have more data. For this, it is key to look for protection solutions with transparent data collection that provide greater user device information. State-of-the-art platforms that combine supervised and unsupervised machine learning to check the multiple data points related to transactions can help to provide the best, most accurate determination to reduce fraud.
In the same vein, Vesta employs a uniquely orchestrated approach that combines biometric evaluations with machine learning to discover and prevent payment fraud before unauthorized transactions occur.
Using our graph link database, we are able to observe every transaction ever made on a site – from who created the order, to how it was paid and delivered. This advanced feature draws connections between 2 trillion data points and helps us connect the dots in real-time, analyzing between fraudsters and good networks. Our models also constantly adapt to new threats on a global scale, drawing data from millions of transactions every minute. All this real-time data allows us to make an accurate risk assessment in milliseconds, effectively preventing fraud while reducing false declines.
2. Use a multilayered system for payment checkout
Intentional chargeback fraud gives monetary refunds to criminals who use stolen card information or reroute product deliveries. This causes companies to lose money on sales that had no real problem. To combat this, use a multilayered checkout approach such as:
- Address verification services
- Chargeback fraud alerts
- Confirm email addresses
- E-commerce plug-in tools to confirm purchases
- Reverse phone number lookups
- Confirm billing and shipping addresses
- Biometric validations like device fingerprinting
- Limit buyer velocity on purchases
- Card verification value (CVV) security codes
Many Point-of-Sale (POS) systems include transaction verification — businesses should take care when collecting, checking, and acting on data received during a sale to ensure the transaction is legitimate.
3. Ensure secure and user-friendly verification
Many customers enjoy using autofill when buying online as they don’t have to enter the same information or get their credit card. However, this increased simplicity makes it easier for hackers to capture and use data.
While security measures may help to prevent fraud, the additional verification in the checkout process causes unnecessary friction and compromises the customer experience.
Thus, it is important for businesses to look for a payment platform that’s both secure and user-friendly.
4. Prepare for Strong Customer Authentication (SCA)
SCA is mandatory under the European Union’s Revised Payment Services Directive. Other countries are similarly writing their own SCA requirements, and this will likely be the future of Southeast Asia too.
Learning about SCA criteria puts you ahead of the game. It requires the use of at least two of the following independent authentication factors:
- Knowledge: something only the customer knows like a PIN, password, or challenge answer ● Possession: only the customer owns this, like cell phones, “device-bound” internet browsers, or credit cards
- Inherence: a customer’s biometric marker such as a fingerprint
Businesses should ensure that they incorporate payment solutions that can support them with these SCA requirements.
5. Increase customer account takeover protection
Account takeover fraud is on the rise and will continue to impact merchants. A form of identity theft, account takeovers occur when a cybercriminal gains access to private accounts and personal information through common approaches such as phishing attacks or using purchased stolen credentials.
Merchants can decrease risks by using a holistic, multi-layered prevention plan that will protect the organization and its customers from the looming threat of fraud attacks.
This includes deploying systems that require multi-level authentication from customers to block hackers. An example is two-factor authentication (2FA) that requires multiple forms of personal information such as biometric information (fingerprint, face ID, etc.) to log in successfully.
The system should also conduct quick investigations and provide the staff with accurate decisions to stop criminal transactions and decrease false denials for valid customers. Vesta meets this demand by analyzing information from every login, including user ID, number of failed login attempts, user behavioral data, IP location). This helps to accurately determine if a fraudster is trying to gain unauthorized access to one of your customers’ accounts.
Shabab Muhaddes is the APAC General Manager at Vesta. He is an accomplished professional with over two decades of international experience in the payment and banking industry. Using machine learning backed by 25 years of transactional data history, Vesta increases approvals of legitimate sales for its customers, while eliminating chargebacks and other forms of digital fraud. The company is headquartered in Portland, Oregon, and it has offices in Atlanta, Miami, Ireland, Mexico, and Singapore.
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