There is no doubt that new commerce channels and methods of alternative payments will continue to be a big storyline. A recent Javelin Strategy and Research report concluded that four out of five consumers are more likely to make a purchase if alternative payment options are available. Several innovative and disruptive channels are satisfying this consumer demand and presenting merchants with new revenue opportunities.
However, these new revenue opportunities are causing headaches for fraud managers. The influx of new payment options, coupled with legacy channels, such as call centers, presents fraudsters with more openings to exploit. A fraudster needs to only find the weakest link amongst the various channels. Fighting multiple battles drains fraud resources and if not done efficiently can negate any benefits of the new channel. With this constantly changing landscape, there are a few fraud prevention techniques that transcend individual channels.
- Build tools that are agile: Make sure that any new channel or alternative payment method is integrated in a way that enables agility and quick rule changes. Fraudsters move incredibly fast and love to exploit systems that cannot adapt and counter their scrappiness.
- Arm yourself with a comprehensive challenge framework: Continually evaluate and add new challenges that can be leveraged when you suspect fraud. This can include tools like CAPTCHA, KBA, Phone Verification, and document uploading. While a lot of these challenges do not need to be utilized on every transaction, they are important to have in your back pocket for when you need to be agile.
- Data, data, data: Utilize as many internal and external data sources as possible to build reputation and look for trends across channels. Fraudsters don’t have a preference for which channel to abuse- they simply look for the weakest link. Make sure that transaction history and velocity are correlated across these channels.
In addition to following these techniques, make sure that there are dedicated resources on your team to understand each individual payment method and the strengths, weaknesses, and liabilities of them. A rise in alternative payment channels is inevitable, so make sure that your fraud strategy adapts to this fast growing market.
Source: “Online Retail Payments Forecast 2010-2014: Alternative Payments Growth Strong but Credit Card Projected for Comeback.” Javelin Strategy & Research™