In Risk on Top of Risk Part I, we talked about the real cost of overprotection and why a “one size fits all” approach is a risky proposition. Over-layering fraud prevention tools can hurt your bottom line in several ways:
- Payment for tools and solutions that have overlapping properties
- Costs associated with sub-optimal customer experience, cart abandonment, extra manual reviews, false positives and unnecessary declines
- Opportunity cost for the time merchants spend untangling fraud prevention solutions that should be spent focused on the core business
In Part II, we’ll explore the different solutions available and how each can help protect payments from end to end.
Authorization tools enable merchants to confirm that the person making the online purchase is the rightful owner of the credit card being used. This prevents stolen credit card information from being used to make a fraudulent purchase.
This adds another layer of protection by requesting a 3-digit code at the time of purchase. This validates that the customer has the card in his/her possession, reducing the chances that the card # used is stolen.
This allows merchants to verify the address of a person claiming to own a credit card with the billing address on file with the issuing bank.
FRAUD PREVENTION TOOLS
Single-factor authentication is a thing of the past – or at least it should be. Passwords alone or no longer enough to keep payments secure: Consumers report having an average of 24 online accounts, but using only 6 unique passwords among them. As data breaches continue to occur, the password has proven itself an almost obsolete security tool. A multi-pronged approach is more important than ever, to protect all channels against shrewd fraudsters. Layering and custom-fitting several tools to a merchant’s unique business needs can mean the difference of millions of dollars to the bottom line.
This technology identifies and tracks devices, browsers and IP addresses used to make purchases on a merchant’s site to prevent fraudulent purchases from known fraudsters. When a fraudulent purchase is made, the device/IP address is fingerprinted and then blacklisted, preventing the bad actor from making future purchases from that IP address or device. Solution providers like Signifyd offer this as part of a comprehensive fraud protection service available at different tiers.
Geolocation technology allows merchants pinpoint a customer’s location at the time of purchase, flagging purchase activity originating from risky areas and identifying purchases made from outlier locations uncommon to a customer. Solution providers like Verifi offer this tool as part of Intelligence Suite, a platform with several tools that can be customized per a merchant’s needs.
This is an emerging technology that shows a lot of promise in terms of ability to stop fraudulent behavior. By registering biometric traits of customers (fingerprint, retinal scan, voice recording, etc.) in a database and requiring authentication via those traits to complete a purchase, merchants can be sure the person making the purchase is who they claim to be.
Solution providers like Ethoca offer alert services that notify merchants of fraudulent transaction early on, allowing them to stop the fulfillment of goods/services, stop the processing of fraudulent orders and avoid fines and fees associated with chargebacks. By stopping the processing of confirmed fraudulent orders, merchants can avoid crossing chargeback thresholds that can increase costs in the form of penalties and ultimately result in the loss of processing privileges.
There are just a few of the many fraud prevention tools available. The key is finding the right combination of tools for your business and making sure they are set to appropriate levels that stop fraud without stopping legitimate orders, too.
Hiring a Digital Payments Advisor can streamline your fraud prevention operations, ensure the perfect balance of fraud prevention solutions are enacted to protect payments and allow your business to grow without inhibiting legitimate sales through too-stringent fraud controls.
Do you need help finding the right balance of fraud prevention tools to stop fraud and ensure good sales keep coming through? Download our latest ebook, “What Every Merchant Should Know About Hiring a Digital Payments Advisor” and learn how a Digital Payments Advisor can do the heavy lifting when it comes to optimizing fraud controls, so you can focus on your core business.