In recent years, online shopping and electronic payments have become increasingly popular, leading to a rise in payment fraud. Cybersecurity has become a top priority in the payments industry, as fraudsters use new schemes to exploit the growing e-commerce industry. 

Faster non-cash payments and the growing popularity of cryptocurrencies have also brought new challenges to the field of anti-fraud tactics. As the digital economy plays an increasing part in our lives, businesses must prioritize secure electronic payments that are convenient and accessible to all.

In the world of online payments, security is particularly important because there is a higher risk that sensitive information, such as credit card numbers and bank account details, could be accessed by unauthorized parties. 

Fraud is expected to cost the card industry over $400 billion in the next decade.

Recommended Security Measures

To combat payment fraud, businesses can implement strong security measures such as encryption, two-factor authentication, and tokenization. 

When you regularly monitor for suspicious activity, you are able to respond quickly to any potential threats. The use of digital IDs can also be helpful in verifying users’ identities and preventing fraud.

It’s also important to protect your customers by maintaining a proper level of security over cardholder data. A business that is PCI compliant assures customers that the security of their data and sensitive information is taken seriously.

Not only does it help build trust with clients, but being PCI compliant also safeguards the company against malignant online scammers and fraud attempts.

PCI compliance is divided into four levels that are assigned depending on the annual number of card transactions of a company. Each level has its own criteria that a business must follow in order to remain compliant.

Do you know which level of PCI compliance your business falls into, and what regulations you must follow based on your level? See our handy

PCI compliance guide to learn more, including how to stay compliant with the new 2022 PCI compliance standard update.

Additionally, you can rely on a technology partner to help you clearly understand exactly which PCI requirements are applicable to your business. This avoids wasting time and money associated with filling out the wrong assessment. Plus, the cost of being non-PCI compliant is way too high to risk, in terms of reputation, loss of customers, lawsuits, and fines.

Security & Fraud Prevention Use Cases

A company with award-winning fraud prevention measures is Revolut. They use a combination of facial recognition and other biometrics, PIN codes, and SMS for login, as well as utilizing payment security, such as single-use virtual disposable cards, temporary card freezes, and an automated security system.

In addition to traditional security measures, new fraud management tools are emerging that use advanced technologies such as machine learning (ML) and artificial intelligence (AI).

By analyzing past data and developing a mathematical model to determine normal user behavior, ML helps financial institutions monitor customer spending habits and detect any unusual activity, without inconveniencing the customer with additional verification steps.

The use of ML and AI is expected to grow in the fintech industry, with more companies implementing these technologies to prevent payment fraud. 

In 2023, we will see more specialized AI models that transform processes like expense and spend management. For example, one type of AI model might provide the full rationale of any transaction based on emails, calendars, sales call notes, and CRMs so a company’s finance department doesn’t have to ask individual employees to justify expenses.

One company that is working on new fraud management tools is the Ireland-based Encryption-as-a-service company, Vaultree. They recently raised $12.8 million in funding to create the first fully functional data-in-use encryption. 

Vaultree’s end-to-end encryption allows users to work with fully encrypted data without needing to decrypt the information or surrender security keys. Unlike traditional data-at-rest or data-in-transit security controls, Vaultree’s technology protects data all the time, whether in use, at rest, or in transit.

Keep Your Business Protected

Payment fraud is a serious threat to the payments industry, and businesses must stay ahead of payment trends and implement strong security measures to protect their customers’ financial information. 

Additionally, partnering with payment service providers and other partners who have experience in preventing and detecting payment fraud can be helpful in identifying and mitigating potential risks. 

As technology advances, the use of advanced technologies such as ML and AI will become increasingly important in preventing payment fraud and ensuring the security of electronic payments.

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• Source: https://www.finextra.com/blogposting/23897/up-and-coming-payments-security-and-fraud-prevention-tools?utm_medium=rssfinextra&utm_source=finextrablogs