As digital technology evolves and the payments space tries to keep up, it’s essential that high turnover companies find payment solutions that can adequately detect and prevent fraudulent activity. Partnering with an experienced and supportive payment service provider will help to keep your business and its customers safe. We explore how PSPs can combat online retail fraud.
The rise and rise of online retail fraud
Whilst merchants are seeking advanced online payment solutions that actively combat online retail fraud, at the same time, fraudulent activity and online scammers are getting more sophisticated.
There are numerous ways in which online criminals target companies and consumers and new ways to mask money laundering and fraud. The recent Nilson Report shows how online payment fraud is, according to some commentators, unstoppable.
With fraudulent techniques evolving, there’s only so much the average consumer can do to protect themselves online. However, various institutions are trying to protect customers and reputable businesses. For instance, South Yorkshire Police in the UK recently issued their top 10 tips to beating online ticketing fraud, whilst global regulators are putting stricter rules and protocols in place to ensure banks, organisations and payment service providers are forced to do more to combat financial crime.
How payment service providers can help merchants to combat online retail fraud
Good payment service providers proactively work to prevent online retail fraud through advanced security and risk management solutions and monitoring tools to detect, identify and report fraudulent or suspicious activities when they occur, and find patterns and gain insights to stop issues happening in the future.
5 main types of online retail fraud
By partnering with the right payment service provider (PSP), merchants can bolster their capabilities to tackle internet-based attacks and fraudulent actions. Here are the 5 types of online retail fraud that can occur:
- Identity theft
- Friendly fraud
- Clean fraud
- Affiliate fraud
- Triangulation fraud
Although merchants should do their due diligence, carry out KYC responsibilities and follow AML compliance rules, working with a reputable and experienced PSP can further ensure your payment solutions are as secure as possible and have tools and functionality to enable you to identify and prevent breaches or fraud incidents. Depending on the PSP you work with, you may be able to go much further and combat international and merchant fraud too.
Improving fraud detection and prevention to help expansion into new markets
Additionally, executives looking into new payment technologies to boost security should also be aware of how these improvements can potentially help them to expand into new markets. Strong security can be a key selling point to new demographics and target markets, boosting consumer confidence and encouraging people to try your company and its services and products out.
The right payment solution not only helps give consumers peace of mind but also helps executives in their daily tasks within the business, saving time and refining internal payment processes.
Risk management services and solutions
Risk is best handled through effective management, not avoidance. Fraud and financial crime come with a host of risks to businesses, including:
- Financial losses impacting cash flows and margins
- AML, compliance and security breaches that can result in hefty fines
- Reputational damage
- A loss of customer trust, and possibly customers themselves
A good payment services provider can help merchants through advanced risk management solutions and expert guidance. Your payment services partner should advise you on the best digital solutions for your business needs, offer insights into risk monitoring and compliance, and help you align with the latest global payments rules. The perfect combination of risk management tools and expert advice will decrease chargeback-to-sales and fraud-to-sales ratios and combat online retail fraud.
Online retail fraud comes with the territory of doing business online. The best way to navigate online payment fraud is to effectively manage the risk of this fraud, and an innovative payment services partner can help.
Fibonatix provides businesses across all sectors with unique payment solutions tailored to their needs, complemented by unparalleled customer service. Our expert team is available to help with all risk management considerations, including providing assistance with meeting regulations and due diligence, growing your brand, and entering new markets. Reach out to our team to discuss your risk management needs.
This article was first published in July 2019 but was updated in April 2022.