Online and mobile transactions are particularly vulnerable to breaches, and passwords and codes can no longer provide adequate security against cyber attacks. Innovative technologies are being developed to meet growing fraud challenges. According to Capgemini, fraud detection systems using machine learning and analytics minimize fraud investigation time by 70% and improve detection accuracy by 90%.   

Machine learning fraud detection

Machine learning enables the creation of algorithms that process large datasets with many variables. The system reveals hidden correlations between user behavior and the likelihood of fraud. Machine learning systems enable faster data processing and are less dependent on manual effort.

MasterCard has adopted machine learning to monitor variables such as transaction size, location, device, and purchase data. The system assesses account behavior and offers real-time assessment regarding the nature of the transaction. The system reduces the number of false declines in merchant payments. According to reports, merchants lose about $118 billion annually due to false positives, while customers’ losses amount to nearly $9 billion.

Blockchain for digital identity

One of the main problems related to fraud is that personal data is shared by a wide range of organizations, providing hackers with easy pickings. By definition, blockchain or Distributed Ledger Technologies (DLT) is decentralized. This factor enables a new approach to identity management. Data can be shared across different transactional channels while enabling robust protection of user identities. Users will have the ability to create encrypted digital identities, and the need for multiple usernames and passwords will be eradicated.

Behavioral biometrics for unreplicable authentication

Behavioral biometrics authentication is based on the principle that no two human beings share the exact same behavioral patterns. When it comes to the use of mobile phones, each user has their own typing pattern, swipe speed and finger pressure. Through machine learning and by analyzing behavioral patterns, smart algorithms can continuously authenticate user identity in the background of a session without interrupting the user experience.

User behavior analysis  

One of the classic methods to detect fraud is to track deviations from usual customer behavior. A smart fraud system will pick up anomalies such as high values and unusual locations, new IP addresses, time of day, changed shopping patterns, and more. After detecting these activities, an advanced algorithm will raise a flag and assign a higher likelihood of fraud. The system will then send a verification request to the card owner in real time.

All of these methods constitute highly effective tools to fight sophisticated fraud. Small and medium-sized companies may find it more affordable to engage external data science experts or acquire third-party software rather than building an in-house team.

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High-risk industries, such as gaming, travel, casino, legal and health services, and hospitality, not only face the above-mentioned challenges but also reluctance on the part of banks and processors to deal with their credit card processing and global payments.

When is an industry defined as high risk?

Industries deemed as high risk may feature some or all of the following features:

• Payments conducted in currencies and countries with high fraud levels
• Subscription-based products or services
• High chargeback ratios
• High credit card fraud rates
• Excessive transaction volumes

What can you do to mitigate risks?

• Fight credit card fraud

Fraud levels vary from country to country. Use an adjustable fraud screening monitor to apply the required level of fraud detection at each of your markets. In addition, check if there are any deviations from usual shopping habits such as the use of a new IP, a change in transaction times and a different country of origin.

An advanced online payment platform uses machine learning to apply smart fraud detection at each market, thereby decreasing false positives and ensuring high capture rates. Chargebacks are reduced due to diminished fraud attacks.

• Apply robust security methods

In order to protect data related to recurring payments or large advance payments your system must be PCI compliant. It is also recommended to use highly secure storage methods, tokenization, hosted payments, 3D Secure and other high-level protective layers.

Sophisticated payment platforms include all of these security means to prevent hackers from obtaining credit card data for money laundering or other criminal activities.

• Monitor recurring billing

Recurring billing may worry customers because they fear they will forget to pay on time or lose track of their payments. A payment solution includes effective billing management features that facilitate recurrent billing processes and track any anomalies in subscription payments in real time.

Tokenization enables secure storage of all the card data and easy retrieval for repeat payments. You can reassure your customers that their payments are being monitored regularly.

• Test your infrastructure

Some industries, such as gaming, travel and hospitality, must handle heavy traffic volumes either all year round or during specific seasons. Test the infrastructure of your website and mobile app in order to ensure that your systems can handle large transaction volumes.

A robust payment solution is capable of handling extremely high volumes of transactions in a wide variety of payment methods and currencies at all times, even during your busiest seasons.

bm2Pay has the experience and expertise to handle your high-risk credit card processing at highly affordable rates. Contact us for more information.

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As a travel service provider’s business scales to global markets, so the risks increase. How can you effectively mitigate fraud, enhance payment security, minimize chargebacks and optimize payment processing?

Our new eBook Best Payment Practices for the Travel Industry offers practical tips on how to mitigate high-risk challenges in the travel sector.

Read Best Payment Practices for the Travel Industry.

What kind of solution should you be seeking when you need to accept online payments in different markets, multiple currencies and a wide range of payment methods?

The best online payment solutions enable the following activities:

• A wide range of local payment options

If your online business operates in various foreign markets, you need to be able to offer familiar payment methods at each location. Some countries use international credit cards, but in others the population prefers local credit cards. In certain areas, debit cards or payment on delivery are the first preferences. Your payment solution should be able to offer the most suitable payment methods at each site.

• Top-level security

You need to ensure that all of the credit card and personal data you store in your system is secure. In order to maintain the highest level of security, your online payment system should feature data encryption and tokenization, 3D Secure, PCI compliance, hosted payments and other protective measures. An advanced payment solution should include all of these options and more.

• Advanced fraud detection

The growing sophistication of hackers means that attacks are becoming more rampant and harmful. But a single fraud detection level does not suit all your markets. It is best to have an adjustable fraud monitor that uses machine learning to adapt fraud screening to the specific risk level in each market. That way you minimize false positives and effectively mitigate real fraud attempts.

• All-inclusive technology

When processing payments, you need to work with various parties including a payment gateway, payment processor, issuing banks, credit card companies and other third parties. Each of these entities collects a fee for its services. Rather than attempting to deal with each of these parties separately, it is easier to integrate with an end-to-end payment solution that handles all of these processes at a reasonable fee. Check out various platforms to see which offers the best rates for all of these services.

• Recurring payments

Many online merchants offer monthly services such as gyms, child care services, gaming, cell phone companies and other sectors. By offering automated recurring payments, you ensure that your customers needn’t worry about forgotten payments, and you will always be paid on time. If you offer subscription type services, this payment model is a must for your enterprise.

• Mobile payments

With the growing popularity of smartphone use, you must be able to offer secure and easy payments via mobile phones. Look for an online payment solution that enables you to build mobile friendly pages and process secure payments via mobile apps. Ensure that the system can process mobile wallets, money transfers, credit cards and other payment options.

As a global online merchant, your aim is to provide your customers with the easiest and most comfortable payment experiences, while cutting costs and increasing processing efficiency at every market. A sophisticated one-stop-shop payment platform enables you to meet all of these needs and many more.

Learn about the bm2Pay online payments platform.   

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What is causing these changes in your payment ecosystem? How can you improve results?

Our new eBook A Merchant’s Guide to Payment Optimization offers practical tips on how to resolve payment hurdles in new markets.

Read A Merchant’s Guide to Payment Optimization. 

With the drop in travel costs, individuals who have never left their native country before are off to see the world. Global travel industry gross bookings hit $1.6 trillion in 2017, making it one of the largest and fastest growing industries in the world.

The travel service sector is highly dynamic. Prospective travellers often check out various websites before independently making reservations. To attract customers in a competitive industry, travel providers must offer added value and competitive rates.

Why is the travel sector considered high risk?

The travel industry has been deemed high risk. One of the main challenges is that it suffers from high chargeback ratios for a variety of reasons:

• Uncontrollable variables

Unexpected events such as inclement weather, political unrest or terror threats may cause unexpected cancellations, resulting in chargebacks.

• High ticket value

The high price of flights and vacations may cause the buyer to have cold feet, resulting in cancellations. The customer may file a chargeback if they cannot get a refund.

• Future fulfillment model

Travellers often book flights months in advance. The buyer is charged immediately via their credit card. If the customer cannot travel for any reason and the travel agent refuses to issue a refund, the customer will claim a chargeback.

Some additional high-risk factors:

• Payments in regions with high fraud rates

Travel industry customers book trips from all over the world. Buyers from countries with high fraud rates want to pay with local credit cards and payment methods that are extremely vulnerable to fraud.  

• Large traffic volumes prior to holiday seasons

Before holiday seasons, travel websites and mobile apps must be able to handle large traffic volumes. If a website or app is incapable of carrying the load, it may collapse when most needed.

One-stop-shop payment solution streamlines credit card payments and mitigates risks

You can facilitate online credit card processing and mitigate travel sector risks by adopting an end-to-end payments solution for all your markets.

• Robust security to prevent chargebacks

An advanced payment solution protects credit card and personal data by using highly secure storage methods, 3D Security, PCI and regulatory compliance, tokenization and other tools. This combination of strong security layers blocks hackers and helps to minimize chargebacks.

• Adjustable fraud screening

Fraud screening criteria should be adjusted according to the risk level at each market. A technologically advanced payments solution uses machine learning to apply the most effective screening level at each site, thus reducing false positives and ensuring better capture rates.

• Heavy traffic volumes

While it is wise to test the capacity of your website and mobile app, a robust payment platform has the ability to handle large volumes of transactions in many currencies and payment methods all year round.

A one-stop-shop payment platform not only optimizes your online credit card processing and mitigates risk but also cuts costs, provides actionable smart data and increases acceptances.

Contact Bm2Pay for information about its end-to-end payment platform.

Photo courtesy of Sarah Pflug