For many financial institutions, offering convenient methods like mobile payments gives them a competitive advantage. With this competitive advantage comes the risk of fraud, but businesses can still offer mobile payments by taking steps to increase fraud detection and mitigation. Some basic measures help reduce fraud risks, so here are a few ways to better protect your online business from mobile payments fraud.
What is Mobile Payment Fraud?
Mobile payments are transactions conducted using a mobile phone and a payment instrument like a bank account, debit/credit card, transport card, or a mobile wallet like PayPal. These payments can be made using digital wallets or peer-to-peer platforms.
Popularity skyrocketed for these methods in 2020 due to COVID-19 and pandemic lockdowns. As a matter of fact, mobile and contactless payment transaction values are expected to triple from $2 trillion in 2020 to $6 trillion in 2024.
However, because mobile payments are a trillion-dollar industry, it’s worth billions to fraudsters and organized cyber-criminal groups. Losses from online payment fraud are expected to increase to $343 billion by 2027, which makes it financially beneficial for cyber-criminals.
Attacks on how businesses handle mobile payments can be swift and cost organizations millions within a short time. As an example, a UK bus company, Ensignbus, allowed riders to use Monzo and Revolut for bus fare but was forced to limit transactions to a mere £10 (approximately $12) to stop fraudulent contactless payments after it lost £10,000 (approximately $12,066) within three months. Because of the rise in fraud using Apple Pay and Google Pay, Ensignbus no longer accepts both digital wallets.
Take These Steps to Prevent Mobile Payments Fraud
1. Follow PCI-DSS Compliance Standards
Any retailer that stores financial information or takes credit card payments must follow PCI-DSS compliance standards. Violations of PCI-DSS compliance can be costly, so organizations should fully review PCI-DSS documentation to implement policies to safeguard consumer financial data.
Covering compliance regulations usually takes the expertise of a third party to ensure every configuration and infrastructure installation follows standards. PCI-DSS regulations oversee firewall installations, encryption requirements, password policies, logging and monitoring, physical access, documentation, and regular cybersecurity scanning. One component in staying compliant is using cybersecurity scanning tools that adhere to PCI-DSS standards, and Fraud.net is one such tool that stays PCI compliant.
2. Educate Your Customers
Consumers can be naive to how their data can be compromised, and the success of phishing and social engineering proves it. You can, however, help educate your customers so that they understand common ways they can lose their financial data. Not only does it help consumers, but it also helps your organization avoid monetary loss and reduces risk.
Cyber-criminals often use various eavesdropping techniques on public Wi-Fi, because it does not have the same level of enterprise security as a corporate network. Users should avoid performing any sensitive activity on public Wi-Fi. If it’s necessary, then users should ensure that they are using a virtual private network (VPN).
Phishing is one of the biggest threats to consumer data security. Customers should be educated on the dangers of clicking links in an email, authenticating into an app after clicking a link, and providing sensitive information over email. Users should also know not to give sensitive information to any caller or untrusted third party without verification.
3. Transaction Monitoring
Businesses can take a few steps to protect data proactively instead of simply monitoring for a data breach after it happens. For financial institutions, it’s important to follow Know Your Customer (KYC) and Anti-Money Laundering (AML) best practices.
Additionally, since mobile payments are performed on a smartphone, your organization should have application security in place that fingerprints a device. With a device identified, the application should monitor behavioral patterns using machine learning and enterprise analytics. Using various anti-fraud infrastructures, administrators and other stakeholders can be alerted to mobile fraud attacks and avoid monetary loss from fraudulent transactions.
Building your own anti-fraud monitoring and detection applications is risky, so administrators and developers can instead take advantage of Fraud.net’s application artificial intelligence screening tools. With Fraud.net tools, financial applications can identify mobile fraud, sanctioned users, and AML risks. Transaction artificial intelligence (AI) provides real-time, continuous monitoring of client payments and other financial events.
4. Screen New Customers
Fraudsters create multiple accounts, knowing that some applications may be detected as fraudulent or use multiple accounts to work with other cyber-criminals in a collaborated attack. Application AI from Fraud.net provides a layer of risk management that screens applications for sanctioned individuals and companies, individuals with a history of financial crimes, fabricated or incorrect application data, forged documents (e.g., fake driver’s licenses), and more.
With Application AI, bottlenecks caused by fraudulent application submissions are removed, freeing up employee time to focus on legitimate customers and their requests, which improves process flow and positively impacts revenue. Application AI also stops bots from flooding the application process, which can cause unnecessary delays for your customers.
Fraud.net’s AI-Powered Fraud Solution
Fraud.net helps your business manage financial threats with an AI-powered real-time transaction monitoring solution that works with machine learning models to stop mobile payment fraud. Our system catches anomalies and lets analysts respond quickly but without any customer friction.
With Fraud.net, financial transactions are screened and sanctioned immediately when an anomaly is detected. Businesses benefit from billions of insights with analytics that help your staff make decisions quickly to contain potential fraud, automated threats, and organized cyber-criminal events. Reporting solutions help stakeholders follow regulations for KYC and AML standards.
In addition to Fraud.net’s analytics and monitoring solutions, our tool is PCI-compliant. Your business remains compliant with advanced technology fraud detection, fraud case management, and fraud intelligence in a single screen. You still need to educate your customers, but Fraud.net will take care of the technology needed to stop criminals from account takeover and identity fraud.
Request a demo today to learn what solution is right for you.
Want to learn more? Download our free eBook: Take These Steps to Prevent Mobile Payments Fraud