7 basic points for risk and fraud management in payment methods


Published 16/08/2021 · 3 min read

Corporate risk, stolen cards, account takeover, friendly fraud... There are many types of fraud that threaten eCommerce every year. However, the focus of this post is not how to recover from them, but how to act in time. Or rather...

How to manage risk? How to be safe from payment method fraud?

If you have an eCommerce business, it is in your interest to know the basics of risk and fraud management. Let's go!

What is risk management in digital payment methods?

The first thing is to know is the main risks faced by eCommerce. In today’s interconnected world, online stores must take care of every detail to ensure the security of their customers.

Some of the most common risks in eCommerce are:

- Friendly fraud. Friendly friend occurs when a customer disputes a legitimate transaction as fraud and this results in a chargeback to a merchant. This could happen when the genuine cardholder who made the transaction fails to recognise the item on their statement. It could also happen when someone who is authorised to make a transaction on a cardholder's account like a family member makes a purchase that the principle account holder does not recognise.

- Identity theft. This consists of obtaining personal data, such as account numbers, bank cards or passwords in order to operate fraudulently on behalf of the victim.

- Reshipping. It happens when someone buys from an online store with a stolen card, claiming the right to receive the shipment and avoid being discovered.

- Account takeover. A user's data is obtained in order to take full control of their account. In turn, some of their data is changed to carry out the fraud.

Managing these risks is a process that involves taking measures to protect and increase the security in online shopping. For example, having a quality payment gateway integrated into the online store.

Operational risk is any possibility of financial loss due to errors or inadequacies in systems, technology, and processes, among other things. With the availability of a payment method provider like PayXpert, operational risk management is much easier to control.

How can PayXpert help you minimise the risk and fraud in eCommerce

  1. Having PCI DSS certification. It is synonymous with trust and security. PayXpert complies with the latest payment industry security standards ensuring that consumers' card data is encrypted and tokenised so that the information cannot fall into unauthorised hands.
  2. Hosted payment page solutions. PayXpert can provide your business with a number of different payment page integration solutions to ensure your customers' card data is protected when they buy goods and services from you. These hosted payment page solutions also make it much easier for you to comply with the PCI DSS standards when you apply for a merchant account for payment processing.
  3. Detailed Analytics. Having a data management system like the PayXpert dashboard to obtain an overview of your payment transactions will help you make informed decisions, identify risky transactions or suspicious behaviour.
  4. Enabling the 3D Secure V2 protocol. It is an authentication solution that collects information about the cardholder during the transaction process to help card-issuing banks confirm if the transaction is being requested by the genuine consumer or someone else intent on fraud. In this way the cardholder is “authenticated” before the transaction goes to “authorisation” to check if the cardholder has sufficient funds to approve the transaction.
  5. Review your internal refund policies and contact information. This makes it easier for customers to contact you directly to inquire about orders, returns, and refunds. PayXpert will check that your contact details, returns, and refund policy are clearly shown on your website when you apply for a merchant account with us.
  6. Clear merchant descriptors. This is the description that appears on a cardholder's statement when they purchase something from you. If your merchant descriptor makes it easy for the cardholder to recognise the transaction, the less likely they are of disputing it under friendly fraud.
  7. PayXpert works with 3rd party fraud solution providers like Ethoca to help reduce chargebacks. The Ethoca system connects card issuers with merchants in a network that provides quick and efficient updates on cardholder chargeback requests so that the merchant has time to refund a transaction before it is charged back using the standard chargeback procedure. This saves the merchant, time and money and provides an additional level of service to the cardholder.

All these requirements directly influence your users' shopping experience. And experience is a key factor in digital consumer trust. It influences everything from the payment method and currency they are allowed to interact with, to the way you display the page where your customers complete the payment.

If you would like to know more about how we can help merchants control risk and fraud then please contact us at PayXpert.

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