Fintech is fighting back on fraud

Retailers are in the midst of the busiest shopping period of the year, starting from Black Friday, through to Cyber Monday, pre-Christmas, Boxing Day and then the January sales. Huge volumes of money will be changing hands, often in high-pace, stressful situations. While on the whole this will be welcomed by retailers, it doesn’t come without its challenges. These extremely busy periods also bring an increased risk of fraud, as scammers use sophisticated technology to try and dupe both customers and retailers. Fintech, and innovative payments technology, is helping retailers to not only make the shopping experience more engaging and convenient, but to also help prevent fraud.

Adyen’s research has found that 60% of retailers across Europe saw an increase in fraud in the past year. With such an increase, there is a natural inclination to tighten fraud prevention measures to deliver greater security. Our research also found that retailers are turning to biometrics to help authenticate payments securely. More than half (57%) of retailers are looking to implement fingerprint biometrics, and 56% are looking to use voice authentication to bolster their cybercrime defences.

However, it’s important to remember that managing payments fraud is not only about keeping out the “bad’ transactions but it is also an exercise in removing friction for the ‘good’ ones. Retailers need to walk a very fine line of doing everything in their power to help prevent fraudulent transactions and protect their customers, but they also don’t want to be overly cautious and decline legitimate transactions. Payments technology is key in this regard. Machine learning and advanced data analysis plays a vital role in accurately identifying the shopper behind each transaction in real-time, to reduce fraudulent chargebacks.

For retailers, understanding the fraud landscape and the security solutions available can be a daunting aspect, especially when many of these solutions are offered in a multi-vendor, siloed approach. This leaves retailers with a number of different security platforms for their in-store, online and mobile solutions. With many retailers looking at delivering a unified commerce approach, a siloed approach can make things even more complicated as each channel brings its own risks. Modern payments technology helps retailers by providing a single, unified risk solution across all channels.

Data, and particular payments data, is crucial to managing fraud. There is a host of valuable information included with each transaction that can help determine if it is legitimate, or suspicious. With a unified commerce approach, payments data and customer purchase history can be taken into account across multiple platforms – ultimately helping to determine if a transaction is fraudulent. For example, if a card is used in store in the UK, and then online from an IP address in Brazil at roughly the same time – flags will be raised. Fintech and payment technology use machine learning and advanced algorithms to undertake a deep dive, looking at data across payments networks, previous transactions and devices used to make transactions, to determine if the sale should be accepted or declined. This all needs to be done in the blink of an eye, behind the scenes to maintain the balancing act between offering a seamless buying experience to customers without impeding the overall experience.

Speed at checkout is critical in both the physical and digital realms. In this new world of blended commerce, there has never been a greater need for a modern payments system that not only reduces friction across all channels to encourage more sales, but also helps to protect customers and retailers against payments fraud.