In a new and emerging world of multichannel and omnichannel payments, a conversation about online payment solutions would be incomplete without also discussing fraud prevention. That's because each channel comes with its own inherent risks. And as more consumers switch to mobile devices, new vulnerabilities in payment systems emerge.
With stores under pressure to process payments speedily to keep the customer happy, it gives banks less time to identify and shut down online fraud. That's why global payment fraud was expected to cost banks more than $31 billion annually in 2018.
But in spite of these risks, merchants can't afford to refuse legitimate transactions and add unnecessary friction to the customer checkout process. Fortunately, there is a solution to this catch 22 - unified data that gives businesses access to instant, highly accurate verdicts on all payment transactions across all channels.
How Unified Data can Help Fight Payment Fraud
If you are an online merchant, you may be familiar with the term 'unified commerce' since it's a growing trend among retailers. It allows retailers to use one technology platform to house in-store, mobile, and online transactions.
This is important because it allows you to paint a complete picture of each customer and spot things you're unable to spot if the data is fragmented. More than 80% of retailers are expected to launch unified data platforms by 2020.
Having access to unified payments data alongside your unified commerce data makes it easier for you to manage your customers, their shopping behaviours, and can improve both the instore and online experience. It also helps to reduce payment fraud.
In this blog post, we discuss the four ways ways unified data can help with payment fraud detection.
Transparent Customer Profiling
A unified data platform allows you to be more open with your customer profiling. It reveals how, when, and where your customers shop. When you have a complete record of your customer's buying habits and patterns, it's easier for you to detect transactions that don't fit these patterns.
Consolidating your data can identify potential red flags in situations where a customer suddenly begins using a different credit card or makes an online purchase from a location that's hundreds of miles away from their home address.
Reduce Customer Frustration
Addressing customer fraud is a sensitive issue for retail merchants. Because while consumers want their information to be safe, they also expect unprecedented levels of convenience. So if you decline legitimate transactions in an effort to guard against fraud, you risk losing your customers.
One of the most significant advantages of a unified data platform is that it helps businesses reduce false positives and, in turn, customer frustration. In each of the examples we mentioned above, how do you know if the transaction is evidence of fraud or not?
Unified data helps correlate data so not only can businesses prevent fraudulent transactions, but also make it easier to allow legitimate transactions to go through.
Real-Time Fraud Detection and Prevention
Online fraud is complicated and hackers are continually finding new ways to game the system and gain access to sensitive customer information. Fortunately, unified data platforms can work round the clock to detect real-time threats and block fraudsters in their tracks.
Here are a couple of examples of typical payment fraud schemes that can be detected with unified data as outlined by McKinsey:
- Synthetic identity theft: This type of fraud involves taking both real and fake information to create a new identity. This new identity is then used to open new accounts and make fraudulent purchases. This kind of fraud is easy to miss because there’s no apparent victim.
However, this type of fraud only works if online merchants have incomplete onboarding data. Using a unified data platform will break down these silos and make it easier to spot this type of fraud.
- Account takeover: With this type of fraud, hackers gain access to an individual’s account credentials and use them to make unauthorised transactions. Account takeover fraud is a very prevalent problem, especially in light of Equifax’s 2017 data breach.
Account takeover fraud is usually identified sooner than synthetic identity theft, but it happens at the expense of the victim. Unified data can spot some of the early warning signs of account takeover.
Reduce Manual Workload
If you run a small business, you may think you would notice if one of your customers were the victim of fraud. At the very least, you probably believe that the fraud detection tools you already have in place are enough.
But as omnichannel payments and online shopping patterns become more complex, less sophisticated detection tools often fail. So it’s important to begin reducing your reliance on manual review and casement with unified data.
And this becomes even more important as your business continues to grow and you have an increasing number of payments to process every day. Payment analytics can spot the signs of fraud sooner and more accurately.
Bambora’s Unified Data Platform can Help Organisations Prevent Payment Fraud Better
Fighting online fraud should be a top priority for your business. Listed below are some further steps you can take to help you improve fraud detection in online payments:
- Stay up-to-date on ongoing payment fraud trends
- Use a PCI-compliant payment processor
- Routinely change your login credentials
- Regularly run security checks with antivirus software
- Use a platform that encrypts all online transactions
When you partner with a company like Bambora, you’ll know you’re fighting fraud without adding friction to the customer buying process. Bambora can help you automate your payment systems to improve the security on your website and make online payments quick and easy.
We'll make it easier to understand your customer’s buying patterns. That way, you’ll recognise the common signs of fraud and be able to respond quickly. To learn more about our solution, contact our sales team for more information.