How to protect your business from payment fraud?

payment fraud

As the trend of e-business grows, so does e-business fraud as well – and each seller, from small startups to large stores, is helpless. 

It’s crucial to know what e-business fraud tools are, which other dangers sellers can meet, and how e-business can stop these threats.

Today we’ll tell you exactly about this so that you can take the necessary steps to safeguard your company, earnings, and public image.

What Is Exactly Payment Fraud?

Payment fraud, whether committed online or through other channels, is the act of making fraudulent or illegal transactions, sometimes by obtaining the personal data of an unwitting victim. While fraud as a whole is nothing new, cybercrooks’ strategies are always changing. 

As a rule, cyber attackers target sellers at random, however, some traders are much more appealing targets than others. Fraudsters prefer the biggest sellers who won’t investigate each transfer, shops that offer luxury items that can be quickly sold back, and “risky” sectors of the economy that are currently overburdened with disagreements and billing concerns.

The majority of online frauds can be divided into the following groups:

  • Credit card fraud happens when a financial cheater grabs the other bank account info and proceeds with unapproved transactions.
  • Identity fraud occurs when criminals obtain enough personal data – such as a person’s name, birthdate, and current or past addresses – to engage in identity fraud. For e-business sellers, this typically happens in the form of a profile hijacking, where the cheaters log into someone else’s profile and proceed with payments using their saved billing data.
  • A refund is a sum of money returned to the client if they are not satisfied with the product or service and contact the seller directly.
  • Friendly fraud. What is friendly fraud? Friendly fraud is when a consumer uses their credit or debit card to make a transaction and then disputes it without a good reason with their bank. The consumer may fabricate a justification for why their claim is valid. Chargeback fraud is another name for this type of scam.

Financial cheaters may employ advanced instruments such as chatbots and malicious codes to compromise security vulnerabilities, gain illegal access, and automate theft strikes. 

Increase in Seller Fraud Threats

Online fraud is a major e-business weakness. Each business is impacted by forgery, stealing, and financial attacks, but online sellers are affected more significantly. Information security companies work hard to take a step forward in advanced safety techniques, however, they don’t always succeed in a high technology race that demonstrates no signs of reduction in the near future.

Each year, the volume of digital attacks grows, getting increasingly complicated. More and more buyers are proceeding with online transactions, and it creates an ideal atmosphere for financial threats to thrive. Worldwide, e-business is expected to lose more than $20 billion by the end of 2022.

Why is Payment Fraud So Damaging To Businesses?

Fraud incidents can be more costly than refunds. Sellers spend enormous amounts of hours and money on selling activity itself, as well as dealing with disagreements. Plus, they are also charged refund payments. And as the cherry on the cake, sellers can lose international and economic reputation.

Payment Fraud So Damaging

So How do Deal With The Fraud and Avoid It?

Payment fraud is pure business erosion, so you have to pay special attention to payment fraud detection.

You may lessen the threat, protect the security of your company and customers, and reduce the risk of financial loss and chargeback payments by putting in the right policies and technologies.

Here are some suggestions on how to act. 

Daily operations and banking reconciliation check

No one understands your industry better than you. You are aware of your top customers and their purchasing habits. Check your finances and operations, such as inconsistent invoicing and delivery info and your clients’ geographical addresses. Utilize techniques that determine consumer IP and warn you about any of them from famous cybercriminal hotspots.

Set restricting limits

Place restrictions for the number of transactions and overall amount that you will admit from a single profile in one day, relying on your order and income dynamics. This can hopefully maintain your vulnerability to a minimal level in case fraud occurs.

Implement the Address Verifying System (AVS) 

AVS is a fraud prevention method that comes with most online payment options; however, verify with your payment gateway to ensure that it is endorsed.

Enable CVV

You have probably seen this 3- or 4-digit passcode written on the back surface of bank cards. What you may not fully understand is that PCI (payment card industry) regulations prohibit you from keeping CVV together with the card details and data of the card keeper. That is the reason why the CVV is so efficient. It is extremely difficult for eCommerce fraudsters to obtain it unless they have achieved a physical card. 

Passcode demands should be stricter

Cybercriminals use advanced software that can guess all possible password combinations. An easy 4-digit password will be hacked in no time. Nowadays, best guidelines recommend at least an 8-digit alpha-numeric passcode with capital letters and one special character. Your clients may complain, however, it will be better to stay secure than to be sorry. Keep your clients aware of why you need stronger passwords, and you will likely receive more loyalty for staying honest and client-oriented. 

Maintain systems and software

As computer providers constantly upgrade their software with safety fixes to avoid corruption and defend you from recently found security flaws and the latest newest malicious software, ensure you are operating the most recent edition of your OS.


Trying to be one step ahead of the fraudsters can be exhausting. Nevertheless, cybercriminals can be deterred with the correct tools and a clever plan, so the game is worth the candle. But never forget that there are always professionals you can contact for help if things are going very bad. Hope they’re not. Wish you good luck! 


Please enter your comment!
Please enter your name here