Payments are now more digitized than ever, with experts predicting that $ 6.6 trillion will be exchanged through digital channels by the end of the year, a 40% increase over the past two years. This growth is expected to continue into the future, with the value of the digital payments market expected to reach $ 10.5 trillion by 2025.
This increase in digital payments is a double-edged sword, however, as it also offers bad actors unprecedented opportunities for payment fraud. Many banks, payment service providers, merchants and other players in the payments industry are deploying advanced cybersecurity technologies such as biometrics, artificial intelligence (AI) and machine learning (ML), while others are turning to customer-centric payment authentication methods such as multi-factor authentication. This arms race between fraudsters and fraud prevention experts does not look set to end anytime soon.
In September / October Authenticated Payments Report®, PYMNTS explores the latest developments in the world of payment authentication, including the growing threat of fraud in the digital payments space, the technologies used to combat payment fraud, and how the growing popularity of e-commerce is changing. the payments space.
Developments in the world of authenticated payments
Rising levels of e-commerce traffic are among the main drivers of the increase in payment fraud. A recent study of Australian shoppers found that online sales increased 65% between March 2020 and January 2021, for example, and that card-absent fraud increased by 3.8%. This type of fraud now accounts for 90% of all payment fraud in the country and represents 0.058% of all credit card spending. However, card fraud is showing a steep decline as this type of fraud is much more difficult in the digital space.
Fraud prevention systems have had some success recently. A recent report from UK Finance said UK banks had stopped £ 32million (US $ 44million) of scam attempts in the first half of 2021, largely thanks to the banking protocol. This program trains bank staff to identify potential scam victims while interacting with bank customers in order to detect potentially fraudulent or non-consensual transactions. The banking protocol was invoked 4,782 times between January and June, according to UK Finance, leading to the arrests of around 90 suspected cybercriminals.
Preventing payment fraud can be a costly endeavor, but many financial executives believe these investments will be worth it. A recent PYMNTS study found that two-thirds of executives believe such investments will pay off in the form of preventing fraud, reducing false positives, and speeding up authentication procedures. Forty-two percent of those surveyed said improving authentication can help increase the number of customers, while 41.6 percent said it could improve transaction completion rates.
To learn more about this and other information on payment authentication, download this month’s report.
HSBC on Payment Fraud Protection with Transaction Analysis and Push Notifications
Payment fraud is a constant concern for banks and other financial institutions, with fraudsters deploying tactics such as business email compromise, phishing, and botnets. Tackling this fraud threat requires a two-pronged approach that leverages both back-end analysis and transaction notifications to customers. In this month’s report, PYMNTS spoke to Drew Douglas, North American regional head of liquidity and treasury management at HSBC, about why customers’ choice of security protocols can reduce their aversion to potentially conflicting fraud prevention methods.
Deep Dive: Protect Payments Against Digital Fraud
The ongoing pandemic has fueled the record adoption of digital payments, but there is a dark side to this growing popularity: every electronic transaction represents an entry point for bad actors. Payment providers had to find innovative ways to protect merchants and consumers from digital fraud as the tactics of bad actors became increasingly sophisticated. In this month’s Deep Dive, PYMNTS explores the fraud threats facing the digital payments industry and the tools banks and payment providers can use to defend against cyber attacks.
About the report
The Authenticated Payments Report®, a PYMNTS and Connection identifier collaboration, is the go-to monthly resource for updates on trends and changes in payment authentication.