As eCommerce has surged during the pandemic, with more transactions and new customers, so too has the rise in responsibility, increased fraud and chargebacks. How have payment service providers (PSPs) been required to heavily adjust their preventive systems in order to mitigate and combat fraudulent transactions?

The scale of economic crime

Across last year we saw a rapid rise in economic crime, reaching a record high of $42 billion. Not surprisingly, the most common types of crimes were customer fraud, cybercrime, and misappropriation of assets. The acquiring market was also subject to increasing cases of fraud rates, family fraud, stolen cards, bot attacks, and scamming schemes, making credit card fraud the most notorious type of identity theft last year. While this of course leads to financial, reputational and customers losses, what is most concerning is that only 56 per cent of companies investigated their most serious fraud incidents.

The pandemic seemed to have been the catalyst for many fraudsters and financial criminals to target individuals with bogus prizes, sweepstakes or prize draws, and free gifts nearly doubling in 2020 compared to the year before. While there were millions of criminal incidents that affected the financial world last year, some of them were thwarted thanks to the collaborative efforts of banks, financial institutions and enforcement authorities. For example, Europol cracked down on an organised network of money launderers with 1,529 criminal investigations initiated and 4,942 fraudulent money mule transactions identified, preventing a total loss estimated at ?33.5 million.

How PSPs protect against fraud

It is vital that PSPs protect merchants and their customers with fully global fraud screening services. Additionally, it is essential that PSPs adapt to the unpredictable and ever-changing landscape of the fraud industry and implement new functionalities to accommodate for the ever-changing financial sector.

Offering bespoke solutions means that each merchant benefits from models tailored to their business requirements and experiences, ensuring quality and accuracy. This offering encompasses effective fraud control services that are modular for banks, issuers, and acquirers and embrace the full payment spectrum while also easily integrated into any payment ecosystem.

What it takes to target economic crimes

There is no single step or effort that could eradicate financial crime. However, mitigating it through modern technology, AI-based algorithms and proper financial crime compliance will make a substantial difference. As we move forward we all need to remain flexible, collaborative and use more data across the payments arena to protect and to serve the frequently unaware victims of fraud. Our expertise and decade's worth of experience can help to effectively mitigate risk and digital crime thereby reducing fraud costs, scheme penalties and operational costs. All these measures safeguard the transaction process and protect from financial loss.