Financial crime and other forms of digital payment fraud have always been a pressing issue for financial technology and payment acceptance companies. However, over the last two years, thanks to the COVID-19 pandemic, fraud threats have been rising at an exponential pace, presenting themselves in a variety of more sophisticated, complex and unexpected ways to online businesses like Cardstream and other payment providers across the globe. This is owing to the fact that the pandemic has caused an acceleration in the use of digital technologies across all areas of the economy with more and more people opting to use online services. In terms of the financial technology sector, we have seen contactless payments, digital wallets and other alternative payment methods used more widely for people to carry out safe and secure transactions over lockdown. But the pandemic has undoubtedly increased security threat levels.
According to UK Finance, in the UK alone, the number of payment impersonation fraud cases doubled in 2020 to 39,360. In total, £150.3 million was taken from UK bank accounts using fraudulent methods, with the average victim losing nearly £4,000.
Therefore, businesses who rely on carrying out digital sales and transactions require innovative solutions to curb this problem by reducing any potential losses, protecting their customers and, ultimately, preventing fraudulent activity from being carried out altogether.
Unfortunately, the bad news is that there is currently no way to fully eliminate fraud. That being said, there are a multitude of different ways to lessen its risk. Payment providers and online businesses across the globe are continuing their efforts at developing more advanced fraud prevention and detection tools to tackle the problem head-on. Artificial Intelligence and Machine Learning (AI/ML), for example, is one of the key models of the gold-standard level of integrated fraud detection. It works through helping businesses to always remain one step ahead of fraud by analysing transactional data for specific patterns and discrepancies.
As well as this, companies need to take into consideration that it is paramount for them to ensure that they have an effective operation in place to deal with a fraudulent attack if it does come about. These could be anything from the protection of physical assets to data accessibility. This is particularly significant for businesses who hold customer data or payment records as it is essential that these types of data are fully protected, in compliance with GDPR laws, and conclusively avoid the risk of an expensive, damaged company reputation.
Post Covid-19, as society inexorably shifts to digital payments, payment fraud will certainly still feature within the payments’ landscape with the fraud risk-level continuing to rise, thus remaining an ongoing challenge for all businesses. However, intelligent safe-guarding operations will ensure that businesses are able to fight back.