The payments world is rapidly advancing technologically and globally, giving rise to many future payment possibilities for users and similarly allowing merchants to attract and connect with others around the world. It is now possible for a user to make payments on the move via mobile devices, enjoy access to multiple payment methods and currency options and feel secure in the knowledge that their sensitive data is protected due to new tools being developed to combat fraudulent activity.
Localisation of Payments. A borderless world gives rise to countless global payment opportunities. By introducing multiple alternative payment methods and currencies, merchants are able to increase their global presence. What is key for merchants is the management of currencies and enabling their end-users to pay / checkout and withdraw funds globally. An example is the current economic situation in Russia where the rouble has hit an all-time low. A merchant operating in Russia has a number of expenses which needs to be settled in roubles, however, if the merchant is paid out in dollars, a second conversion to roubles will result in a loss due to currency fluctuations. A merchant that uses the expertise of a payments provider partner will be able to make use of a few currency features; Dynamic Currency Conversion (DCC) offered within the payment page allows the merchant to select his preferable currency, and the settlement feature which gives a merchant the opportunity to settle in, like for like currency, i.e. rouble to rouble, therefore not needing to depend on currency changes. These features enable merchants to reduce their risk to currency exposure.
Mobile Payments. Paying via mobile is not new, however more advanced tools for mobile payments have recently been introduced making online payments easier and simpler. These new payment tools lead to a higher conversion rate. Mobile hackers have become a new threat and although not yet particularly sophisticated, it will only be a matter of time before systems are cracked and sensitive data compromised.
Identifying and Combatting New Fraud Trends. A number of fraud trends can be identified;
Identity Fraud – Recently, new fraudulent trends have been identified. There is a growing occurrence of users in some countries obtaining credit cards from the US illegally. They then use multiple cards and rack up high amount transactions. Another case is when stolen credit cards from the US pass complete authentication for 3D Secure.
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Fraud Rings – Fraud rings are increasingly prevalent, and especially in online poker as there is the opportunity for a group of fraudulent players to collude together to defraud a legitimate player, or for a group to launder stolen credit card funds onto a genuine credit card or into an anonymous e-Wallet.
Fingerprint Activation – The more advanced technology is becoming the trickier it gets for a hacker to gain access to sensitive information. Today, it is possible to make payments via digital devices, but specifically mobile payments are being highlighted. There are a number of new mobile payment technologies on the market such as the simple touch of a finger that enables transactions to take place. There are many fraudsters that will try and obtain sensitive card data and this is definitely going to be a space to watch as it will not be long before a solution is found to crack even these hi-tech security measures.
Combatting Fraudulent Activity
Online retailers will need to become more sophisticated in 2015 to beat the fraudsters. There are techniques like Dynamic 3D Secure available which allow payment service providers to manage a 3D Secure flow for suspicious orders based on multiple criteria in a rules engine in real-time. Merchants’ risk of chargebacks and fraud are minimised, and risky transactions are converted into payments instead of automatic rejection during the fraud screening flow. In the past, merchants chose not to implement 3D Secure as it reduced conversion rates. End-users would simply grow impatient while waiting for 3D Secure authorization from MasterCard/VISA and abandon their transaction. With Managed 3D secure, payment services providers are now capable of knowing when to activate or deactivate 3D Secure and combine smart routing to reduce risk and increase conversions.
The introduction of 3D Secure 2.0 in 2015 will see a move away from user passwords to authorise online purchases. Initially it will use tokenisation, and then secure biometrics. Faster to use and harder to hack, this new version of 3D Secure provides a combination of speed and security that will shift the balance of risk more in favour of the merchant. Users flagged as suspicious should be given an option to pay via a secured flow, and if authentication has been successfully completed, then the third party accepts these transactions as legitimate and ensures a liability shift in a case of chargeback. It’s a tough world out there, merchants need to protect themselves as best they can.