Hero Image

October 15, 2021

How to Detect Payment Frauds in Real-Time

With increasing frauds in payment gateways, it is important to address them before they become difficult to handle. Learn how to detect payment frauds!

With digital and mobile technologies being sought after in the current market, there are also increased frauds that hold back businesses from achieving goals. Advanced systems increase vulnerabilities associated with payments and banking transactions. Banks, corporate giants, top MNC's and other businesses face fraud threats and security risks more often.

Use proactive detection and a powerful defense mechanism to combat frauds. This article covers the importance of payment fraud detection in real-time.

What is Fraud Detection?

Josh was the CEO of a reputed e-learning company. He was sipping his morning coffee in the cafeteria and received a call from the operations manager. He was worried about negative feedback from customers. Many customers made a transaction but lost their money. This was because their money got debited from the account but did not reflect in the e-learning company’s bank account. He detected fraudulent activity as the payment portal was taken over by a hacker. He didn't pay attention to addressing gaps in the system.

Complex infrastructure and increasing payment speed have resulted in higher payment fraud rates. Most payment frauds occur during money transfers and transactions. Fraud detection involves the process of preventing cyber criminals from obtaining money through false pretexts. Cyber criminals resort to hacking, phishing, malware, and planting Trojans.

According to Merchant Savvy’s payment fraud statistics, global losses from payment frauds tripled from $ 9.84 billion in 2011 to $ 32.39 billion in 2020. It is critical to detect real-time payment frauds and address them beforehand. Payment frauds can be committed in various ways through different portals and platforms. Real-time fraud detection aims to analyse the current payment system and find security vulnerabilities. It helps to detect the probable windows used by fraudsters to detect customers involved  payment and close them before fraud occurs in real-time.

Why Does Detecting Fraud in Real-Time Matter?

Detect  payment fraud proactively in real-time to stay several steps ahead of fraudsters and cybercriminals. Early detection would help you mitigate risks in cybersecurity and remain prepared to counter cyberattacks from fraudsters. Providing secure payment gateways to customers helps you avoid chargebacks or fines due to fraudulent transactions.

Ensure real-time financial crime management through fraud detection tools. The world is moving to instant payment systems such as UPI and API. It is essential for e-commerce, banks, and companies to use payment systems. It is essential to meet real-time needs and cybersecurity compliance requirements. The key is to prepare for real-time payments and leverage real-time machine learning tools to prevent fraud. Obtaining feedback from customers in real-time will help you confirm the fraud. It helps update rules, models, and strategies as well. Remaining proactive in analysing and detecting risks that could lead to potential fraud is essential.

What Do Businesses Lose If They Do Not Detect Fraud in Real-Time?

With real-time payments becoming the new-normal, numerous fraud prevention requirements come with it. Undetected frauds lead to decreased customers, impact reputation, and compromise a business. Banks, e-commerce giants, and payment systems adhere to new strategies and satisfy customer’s concerns regarding security and integrity. The best way to achieve this is to minimise loss by stopping fraud in real-time across banking channels. This would also bring many benefits, including faster processing of high-volume data and storing relevant data in memory to overcome low latency responses. Also, identifying and acting on new, unusual behaviour is important. It also helps businesses identify suspicious behaviour and monitor fraud investigation efforts. Address payment frauds beforehand as it could cost you critically. Hackers resort to phishing and manual authentication through fraudulent sources and other means.

Fraudsters launder money illegally through online platforms such as APP, account takeover, and account creation fraud. In APP, fraudsters trick users into making a payment from a legitimate company through real-time payment portals. They also used money laundering to move stolen funds quickly. Hijacking accounts, swindling money, and creating new accounts through a stolen identity are common fraud strategies.

How to Detect Payment Fraud in Real-Time?

The best way to deal with fraud is by anticipating it and removing it from the root. This would ensure that it does not grow to monstrous proportions. Leverage the use of various tools and techniques to detect potential frauds through real-time payments fraud screening. Use of address verification services, cart verification value, device identification, payer authentication, and lockout mechanisms to mitigate risks.

If you are issuing credit or debit cards to customers, make sure to provide a one-touch system to block the cards. Keep tabs on customer activity and flag large transactions for further approval. Use suitable analytics tools, risk analysis tools, and fraud graphs to do a thorough screening. Build a convenient solution that addresses vulnerabilities. Screening for known fraud patterns helps detect suspicious activity. You can also detect money mules and account takeovers easily. Prevent payment frauds from happening by improving the accuracy of risk scoring and transaction blocking in real-time.

  1. Understand The Behaviour of Fraudsters
  1. Revamp Your Fraud Detection Strategy with AI and ML

1. Understand The Behaviour of Fraudsters

Suppose your fraud and AML compliance teams work in silos. In that case, it becomes challenging to track the proceeds of fraud. This is due to challenges in laundering and understanding criminal behaviour in the account portfolio. Cybercriminals pretend to be from your bank’s fraud department and claim to investigate frarmica.ai

udsters. Customers are then persuaded to transfer money into the hacker’s account on the pretext of keeping it safe. This money goes right into the criminal’s pockets.

Keep a standardisation method and relevant scripts in place to prevent customers from being tricked. View potential fraud and money laundering with a transaction analysis. You can detect suspicious payments across all banks that send payments to an account through a broad perspective.

2. Revamp Your Fraud Detection Strategy with AI and ML

Improve customer satisfaction by integrating cybersecurity systems with an AI-powered platform. Achieve this by building customer confidence through assured compliance and security standards. Provide robust authentication to customers by going beyond tests with facial recognition, thumbprint, and iris scanning. With each API developed by each bank, it is ideal for standardising them to ensure a smooth flow. Implement real-time account validation for important transactions by verifying the ownership, payment history, account state, and consistency of personal information.

Enhance fraud prevention strategies with artificial intelligence and consortium data. Collaborate with reputed agencies that provide cybersecurity services. Use a secure platform to share industry-wide fraud signals. That would feed machine learning models with proprietary data and ensure faster and efficient detection. Machine learning systems are more efficient in detecting fraud in comparison to a rule-based approach. It enables you to detect hidden implicit correlations in data and automatically detects possible fraud scenarios. Reduced verification methods and real-time processing incorporate machine learning methods to detect payment fraud.

Stay ahead of competitors and meet the cybersecurity requirements by sticking to these simple methods to detect payment frauds in  real-time. Address customer needs by establishing a secure platform for conducting transactions. The key is to stay a few steps ahead of fraudsters and anticipate every move to ensure fraud-free transactions. Learn more about fraud detection tools and similar topics by subscribing to our newsletter.