The increase in availability and scope of digital payment options is great news for businesses and customers, but it comes with an unfortunate price. In 2021, payment fraud cost businesses an eye-watering $756 million in the US alone, according to Statista. This is why businesses and tech developers are fighting back by creating tools to secure payment infrastructures. Although your business will never be 100% fraud-free, there are ways you can reduce instances – continue reading to find out more.
Adopt Secure Payment Solutions
Accepting digital payments helps with business expansion and allows you to provide countless different payment methods, which is a great way to attract customers. However, you need to understand the risk involved with certain digital payments and be prepared to combat fraud. For example, providers like PayPal use the ACH payment system, which was heavily targeted by fraudsters and cybercriminals, leading to significant losses for both businesses and customers.
To plug the leaks in the ACH payment system, the body responsible for governance reinvented its compliance regulations and now requires all accounts to be verified. Thanks to advancements in technology from Yodlee account verification, this can be achieved almost instantly. Although Yodlee account verification is a third party, it’s exposed to the same levels of scrutiny as official banks.
Be Vigilant When Taking Payments
Whether you’re taking payments in-store or online, you have to train employees to be vigilant when it comes to fraud prevention. For example, when taking payments in person, you’re entitled to ask for proof of ID to match the details on the card with the customers. Alternatively, if you’re taking card payments online, you can match the payment and residential addresses by using the Address Verification Service (AVS).
Maintain Thorough Payment Records
Your business needs to keep hold of payment records, both incoming and outgoing. This includes retaining records of receipts and invoices. Having this information allows you to watch out for any anomalies. As your data grows, you can use artificial intelligence tech to catch fraud before it happens.
Assess Chargebacks
When a customer pays by credit card and the funds are disputed, they’re held in limbo until everything is resolved. If the customer wins, they’re not liable to pay the funds and you lose out on the sale; businesses may need to pay a chargeback fee. Unfortunately, this system is often exploited by fraudsters. To reduce the risk of unnecessary chargebacks, it’s important to assess all instances and gather evidence.
All employees need to be trained to follow correct payment protocols, including when taking credit card payments. However, the regulations surrounding chargebacks change constantly, so it’s important to keep updated and alert your team of any relevant information.
Wherever there’s money, criminals aren’t far behind, and payment fraud can be extremely lucrative. Typically, payment fraud is opportunistic, with criminals relying on businesses becoming complacent in their defense tactics. To fight back, it is essential to review your current strategies and evolve with the times.
