Avoiding Payment Fraud

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With the rise of e-commerce, so has online payment fraud through an online payment gateway, which has become one of the most common and damaging illegal activities on the internet. Experts predict that e-commerce credit card processing fraud will exceed $25 billion by 2024.
E-commerce payment fraud includes almost any unauthorised or illegal online transaction carried out by a cybercriminal. Its victims are individuals and businesses who are defrauded of money, interest, property, or personal information via the internet. This can be particularly troublesome for businesses that operate under less legal and regulatory certainty.

Because of the massive volume of electronic transactions that occur all the time all over the world, online security threats are everywhere. However, there are several steps that businesses and consumers can take to avoid – or at least reduce the risk of – falling victim to payment fraud.

How does payment fraud happen?
Cybercriminals have become more skilled at obtaining sensitive information on the internet illegally. Hackers gain access to unprotected network security ...
... systems via flaws and out-of-date patches. Or they pretend to be legitimate sources, stealing online users' personal information via fraudulent or malware-infected email, instant messages, smartphone texts, websites, phone calls, and web auctions.

What kinds of payment fraud are there?
Many types of online payment fraud are committed by cybercriminals and hackers, including:
Identity theft is defined as stealing someone's personal information and using it fraudulently.
Phishing is the practise of stealing personal information by sending emails from ostensibly reputable sources in an attempt to persuade recipients to reveal private passwords and financial information.

Pagejacking is the illegal copying and hijacking of legitimate website content, followed by rerouting traffic to a different website containing malware.

Advanced fee and wire transfer scams: requesting money in advance from credit card users and e-commerce business owners in exchange for something later.

Setting up a merchant account for a supposedly legitimate business, then charging stolen credit cards and disappearing before the cardholder realises the fraudulent transactions.

Credit card processing fraud
While EMV credit cards have helped to protect against fraud in-person, their embedded computer chips do not provide protection online. There are several ways that astute cybercriminals can use stolen card data to make fraudulent purchases.

One of the most common is simple credit card theft, in which fraudsters obtain personal account numbers, expiration dates, and cardholder names. Another method is card testing, in which hackers steal credit and debit card information in bulk and then test each card with small transactions to see which are still unreported to issuers. Thieves may use stolen credit card information to purchase physical goods before intercepting or redirecting the packages during delivery, resulting in lost merchandise, merchant chargebacks, and refunds.

How can you avoid fraud?
In general, understanding online threats is critical; the digital security mindset is just as important as the monitoring technology that delivers it. You can't defend yourself if you're not aware of the latest fraud trends and your own online vulnerabilities.

Of course, keeping internet security systems up to date is essential as well. Businesses should encrypt transactions and emails containing sensitive information, change tokens and login credentials frequently, control user access to sensitive data, run website security scans on a regular basis, and require customers to be logged into their own accounts before purchasing.

Basic protection steps
Because neither the credit card nor the cardholder are physically present, all e-commerce transactions are card-not-present, increasing the risk of fraud. To combat this, you should collect data to detect potential cybercriminals and ensure true cardholder identity by employing the following methods:

Address Verification: Request a billing address for each transaction to ensure that it matches the contact information on file with the card-issuing bank, and use it as a cross-check for the shipping address.
Card Verification Value/Card Number: Request the CVV or CID code found on most consumer credit cards to ensure the purchaser is the cardholder and not a criminal using a stolen number.

Adding AVS and card security codes to online checkout can also help slow down the payment process for each transaction through the best online payment gateway, making your site less appealing to criminals.

Geolocation protection steps
With hackers from all over the world posing a threat to a globally interconnected online marketplace, merchants should analyse transaction risk using country-specific IP filters.

Geo IP tracking: Track device, IP address, and IP geolocation velocity to automatically reject purchases from suspicious countries.
Country issuing the card: Increase your geolocation control by using a filter that allows you to approve a transaction only if the card used was issued in the country you specify.

Advanced protection steps
What can you do if hackers have accurate billing addresses and security codes and can avoid IP address detection using web proxies?
Database security risks: This tool, like spam detection, allows you to compare each purchase to a list of high-risk card numbers and contact information associated with known fraudulent transactions.

Limits and quotas: Adjust your e-commerce settings to only approve quantities or transaction values that fall within a certain range, automatically flagging or declining anything outside of that range.
Buying patterns and velocity: Use velocity checks to detect attempts to exceed your limits and limit the number of transactions that can occur in a given amount of time.

Paused transactions: Using filters, you can automatically place a hold on suspect transactions, particularly large-ticket purchases, and then manually review orders or contact the cardholder.

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