The pandemic has driven even the least tech-savvy to the virtual world for everything from work to shopping for groceries. This has translated to the evolution of new consumer habits acclimatised to virtual transactions – causing an increase in the usage of digital payments over the past year.
According to a study by Juniper Research, the global value of virtual card transactions is expected to reach US$6.8 trillion by 2026, jumping from US$1.9 trillion in 2021. This, combined with how more businesses are taking their operations online, means that digital transactions will continue to see sustained growth.
In Singapore, local consumers’ enthusiasm for digital wallets is expected to supplant credit cards with digital wallets as the most popular payment method by 2024.
India, on the other hand, is leading the digital payments revolution in Asia Pacific with the largest volume of real-time payments globally above even China. India’s real-time payments are expected to grow to 71.7% in 2025 from 15.6% in 2020. And the Indian government is not slowing down its Digital India agenda, with plans to drive toward 1 billion transactions per day from 41 million in 2020.
Unfortunately, as payments evolve, so does fraud—growing ever more complex and sophisticated. Yet even though eight of 10 businesses in Asia Pacific expect security breaches in the next year, many are simply not taking action to prevent such threats.
Reducing resistance to implementing protective measures
See also: Testing QA New Section BDC Feature Winner 1
Fraud can be the stuff of nightmares—cybercrime is predicted to inflict damages totalling US$6 trillion globally in 2021. If measured as a country, it would be the world’s third-largest economy after the U.S. and China.
In Asia Pacific, there is a growing trend in synthetic identity fraud – 61% of merchants report higher rates of such fraud, which is the most amongst all regions globally. Nine in 10 Singaporean merchants have reportedly lost revenue due to payment fraud—synthetic identity fraud and account takeover fraud were ranked top in causing operational and revenue losses in Singapore.
One thing’s for sure: fraud is a virus that will only continue multiplying into a serious liability. As the adage goes, prevention is better than a cure. Poor customer experience and preventable losses make businesses sitting ducks without the necessary precautions.
See also: Unpublished article shouldnt be accessible testing
Businesses need to take action by deploying adequate tech solutions
1. Eliminating chargeback fraud
Chargebacks are often a cost of doing business. The pandemic triggered shipping and logistics challenges, exacerbated by travel shutdowns, which have resulted in even more chargebacks. While many of these were legitimate, some were the result of fraudulent activities.
Chargeback protection solutions can help businesses automatically manage disputes and recover time and money. Businesses should also implement strong verification methods that can check if the billing information a customer inputs matches the billing information on file with the issuer. Creating automated flags for unusual orders, like an order with a high quantity of the same product, is also an option.
2. Use machine learning in the cloud
Preventing fraud by flagging potential fraudulent transactions must be done accurately. Inaccurate flagging of false positive fraudulent transactions costs time and positive customer experience.
Data analytics at scale and machine learning in the cloud can be used to detect and mitigate fraud effectively and accurately. Simultaneously, migrating on-premises databases to the cloud lets machine-learning models and data analysis deliver the same performance as legacy systems at a lower cost.
To stay ahead of the latest tech trends, click here for DigitalEdge Section
3. Working with stakeholders
Fraud protection should not happen in silos. Prioritising the protection of online transactions should be done in partnership with in-house expertise and industry partners. Collaboration can improve the time to detection, ultimately reducing the financial and brand costs.
4. Keeping on one’s toes
If there is one definitive trait about payment fraud, it is that it is constantly changing. Ongoing diligence is needed if we hope to keep fraud at bay and customers safe. This means upgrading authentication or tokenization when able, being on the ball with creating sophisticated solutions for chargebacks, or even sharing how to identify the latest fraud scam with one’s customers.
Ultimately, businesses that approach payment security holistically will emerge stronger in the long run. Finding the balance between managing risk and enhancing our customers’ experience will be a challenge, but it is the only way forward to navigating the increasingly complicated space of digital payments.
Jim Magats is the SVP for Payments and SMB Solutions at PayPal
Photo: Pickawood/Unsplash
