Credit card fraud detection strategies must walk a fine line to protect their income. It’s important to find solutions that keep your business and customers safe. Keep reading to learn how to prevent false positives and lost income.
A false positive means a “real” customer sale is flagged as a fraud. This creates unhappy customers who may leave and never return. These customers often tell others which creates a negative brand reputation.
Thus, false tagging and denying customer purchases creates many problems. In 2017, retailers denied $2 billion legitimate orders. It’s impossible to define the negative ripple effect for these companies.
Since it’s hard to measure false positives, many retailers don’t know they have a problem. Yet, Aite's survey reported that 62% of merchants had more false declines in the last two years. They also predict that by 2021, errant denials will cost $443 billion.
During the COVID-19 pandemic, e-commerce and Card Not Present (CNP) transactions have spiked. The commercial industries have also experienced a sharp rise in cyberattacks. The following strategies can help your company fight revenue losses due to fraud.
Using different approaches to vet customer data makes it harder for hackers to gain access. Avoiding “guest checkout” is one example.
Avoid approving a credit card transaction without any customer data. This decreases CNP-related risks.
Many companies use verification platforms which creates a seamless authentication system. The software analyzes data points, behavior trends, locations, and other parameters.
It flags aberrant information and declines the transaction. This helps correctly identify cybercriminals and reduce revenue loss.
Cybercriminals are experts in finding companies' weaknesses. Merchants must remain diligent about keeping technology current and running all updates.
The landscape changes continuously. Cybersecurity systems watch for new attack strategies and build countermeasures. If you fail to update your system, you won’t have the protection you need.
The ultimate goal of fraud protection is prevention. If you focus only on detection, you’re often too late.
Using a layered Fraud Detection and Prevention (FDP) approach reduces risks. It can also decrease lost revenue due to false-positive declines. More complex solutions make it harder for hackers to break in.
Artificial intelligence and effective machine learning improves accuracy and customer experiences. Instead of following set rules, they analyze trends. This means the machine can quickly determine data accuracy.
This analysis collects data such as the user’s known device and transaction patterns. It watches for login attempts and account changes. Some platforms include biometric and keystroke patterns, fingerprints, and keylogger events.
Deviation from the normal parameters generates a flag. The machine then “learns” if the unusual pattern was valid or signaled fraud.
Today, retailers must protect against credit card fraud with detection while decreasing false declines. It's key for owners and security personnel to stay ahead of the cybercriminals. This can be a daunting task.
Vesta is a global fintech pioneer specializing in payment and account fraud protection. We’ve helped companies optimize revenue and end the fear of fraud. Our patented technology delivers decisions in under one second.
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