With an increase in online shopping and mobile payments, incidents of card fraud have grown exponentially in the last few years. According to McKinsey, this results in a worldwide loss of almost $23 billion estimated for 2016 alone. Apart from direct frauds, fraudulent blocks of genuine transactions also result in loss of sales for online retailers.
Today, many merchants are migrating to EMV chip card technology, the global standards for chip-based debit and credit card transactions. This results in a slight reduction in fraud, for card present (CP) transactions, but the frauds for card not present (CNP) transactions is increasing day by day. Mobile phone transactions are at risk as the operating systems of phones and tablets are not updated frequently. There are very few phones users, who are using anti-virus software which can help protect their devices and prevent fraud. As commerce is shifting online onto mobile phones, any type of financial fraud is testing the hard earned connect that MNCs have with consumers, thus putting the reputation of their brands at risk.
To protect themselves, companies need to implement fraud management systems and tools. Like any industry, even financial fraudsters have common tricks which they all use for a period of time and then move to the next new trend. An important factor here is to understand the patterns of online fraudsters; – find the path and direction along which the fraud is taking place. This helps in predicting frauds and mitigating the risks posed from these hackers.
As technology evolves, so does card-based transaction tech. Magnetic strip card transactions have now changed to EMV chip-based transactions.
Fraud management is posed to be a never-ending task for banks and e-commerce companies. Cyber attacks are often initiated by malware. These malwares are passed through emails and social media. It collects a customer’s data, including the PIN and other authenticating information which are usually used for online shopping. Banks and e-commerce companies keep updating their security and payment software, but fraudsters can still find chinks in their armor.
These three steps can help organizations prevent frauds.
Employing advanced analytics
Companies can take advantage of data analytics to enhance their fraud detection tools. This needs proper collection and analysis of a customer’s purchasing history, location, usage frequency and device type which helps in authenticating transactions.
Advanced data analytics are improving the effectiveness and efficiency of fraud management. With the integration of data source, modeling techniques and automation technologies, data scientists are transforming the way we approach and prevent frauds.
Re-engineering fraud case management
A better way to prevent fraud is to adopt an integrated fraud strategy across all business and transaction types by implementing fraud prevention policies, transaction limits and thresholds in all channels.
Leading companies are taking these steps to enable next-generation fraud management systems which include visual monitoring, live decision making, lean management and robotics. This increases the speed, reliability and customer satisfaction and it also reduces costs and system errors.
These are some advanced tools which are able to predict any unusual behavior of a consumer and alert the concerned team accordingly.
Improving customer experience
E-commerce companies need to think constantly about customer experience. Poorly designed authentication systems largely impact a customer’s engagement. Companies need to redesign their system to enhance a customer’s online journey. By doing this, companies can uncover opportunities to offer a great online experience and draw a long-term relationship.
BSE Institute’s course on Anti Money Laundering provides participants a clear understanding of all legal and regularity obligations that companies have towards their consumers. You gain an essential perspective on the broader agenda of financial crimes.
Fraud management not only reduces losses but improve customer experience and sales. Companies that adopt the practices mentioned above can protect themselves against fraud and cyber attacks which ultimately boost customer value, loyalty and engagement.