How to quickly process transactions related to payment fraud

Payment technologies are evolving rapidly, but fraudulent payment schemes are also changing. As soon as one scheme is defeated, fraudsters come up with a new one. Payment fraud hurts not only merchants and issuers, but also the end consumer. Experts predict that in 2025, the damage that direct payment fraud will do to the U.S. economy will be more than 44 billion Euros. Every year this figure will increase by 7-8%. Because of fraud, customer loyalty to companies will deteriorate, and operating costs will rise. This will lead to a loss of at least 90-150 billion Euros.

For cardholders to be well protected from fraudsters, there has to be a balance between the speed of payment and its security. It is essential not only for funds to reach the final destination as fast as possible but also for it to happen without any problems. If we talk about payments, their approval should take place in real-time. Still, at the same time, it is obligatory to carry out authentication. It is these characteristics and combines credit card processing by Wallester.

Comprehensive strategy

A comprehensive approach to the issue of combating fraud is not just to ensure the safety of each individual transaction but a whole set of measures used throughout the cardholder’s journey. It should include the following:

• KYC. “Know Your Customer” involves the customer meeting specific regulatory requirements and going through due diligence;
• 3D Secure. This is an advanced technology that protects online payments by identifying the cardholder and validating the transaction within a limited time frame;
• Additional authentication methods. You can set up different authentication methods, including PIN entry or CVV verification;
• Transaction dispute resolution;
• Handling chargebacks.

A fraud plan is a must-have whether you plan to launch a new card program or refine an existing one.

What to watch out for

One of the reasons for the skyrocketing number of payments has been the worldwide pandemic. And the number of transactions without presenting a payment card increased significantly. Issuing companies shall be guided by three principles to provide their clients with an opportunity to use this service and not worry about the safety of their funds:

• Use data wisely;
• Make decisions in real time;
• Make your own rules for your organization.

Let’s briefly examine each of these rules.

Use data wisely

Information is a powerful tool in capable hands. Most issuers have an abundance of customer data but don’t know how to use it and put it to good use. Most of them use the risk scores of major card networks like Visa, but studying your own information is much more effective. It will help you get to know your customers better and study their behavior.

If a chip cardholder uses a chip card at a POS in one city and moments later is paying with the same card but on the other side of the country, having data on that customer can make a much more accurate assessment of the likelihood that the second transaction is fraudulent.

Make decisions in real-time

It’s essential that while maintaining a high level of authorization, a low level of fraud is maintained. This is a necessary balance for the security of the transaction processing process. That said, authentication, processing, and approval of an incoming transaction must be done in fractions of a second. Suppose precise card transaction control rules are thought out. In that case, the issuer is more protected from the influence of local fraud schemes at the regional level. You can also create rules that are based on transaction speed and amount.

To make transactions as secure as possible, the issuer should meet the following conditions:

• create and implement rules to spot-check card transactions;
• invest capital in software that creates data-driven rules that incorporate card network risk assessments;
• reduce the impact of fraud and reduce false positives.

Make your own rules for your organization

Following the previous points, it is crucial to combat fraud. Still, it’s not enough for all issuers to secure all transactions. For some, it may be essential to create and write their own rules. These are the ones that will help better control the authorization process.

For example, to authorize or deny a transaction, some issuers may build a rule that considers the risk of the card network, the merchant ID, or the purchase amount. It’s also possible to set rules regarding the number of transactions allowed per day or more complex formulations considering geolocation, fraud risk, and transaction amount. Wallester offers its customers a platform that will enable them the flexibility to customize their transaction processing rules to strike a balance between speed and security.

With Wallester’s platform, a risk management and support strategy can be designed precisely and tailored to the requirements of any issuer. The company takes a multi-tiered approach to fraud prevention, keeping authorization at the proper level and not slowing down transaction processing speed. This has a positive impact on customer loyalty to the brand and helps in the fight against fraudsters.