According to The Nilson Report, payment fraud exceeded $24 billion in 2016, with the lion’s share of those losses occurring in the United States. The problem figures to get worse, with experts predicting payment fraud to surpass $31 billion worldwide by 2020 — hacking strategies continue to evolve as thieves become more creative.
Fortunately, fraud protection tools are also improving as security experts continue to plug holes and develop stronger safeguards.
Below are just some of the more popular developments on the horizon.
1. EMV Chip Technology
EMV credit card processing is nothing new, but it is far from universal — especially in the United States, the last major retail market to adopt this more secure payment standard.
However, this likely will change in 2017 as more stateside merchants begin accepting chip-enabled credit cards in their physical retail stores.
2. Stronger Passwords
The downside of EMV card adoption in retail stores is that more criminals are taking their activities online. In response, e-commerce merchants are increasingly requiring stronger passwords that contain capital letters, lowercase letters, numbers and symbols.
3. 2-Factor Authentication
Even the strongest passwords are susceptible to hacking, which is why many e-businesses and online consumers now use 2-factor authentication. In order to log into a shopping cart, a customer must provide both a password and some additional piece of verification. Common authentication steps include:
- An SMS text sent to the customer’s phone
- A USB security key that the customer always carries
- A security question — e.g., “What is your favorite color?”
4. Fraud Management Filters
Fraud management filters allow you to automatically flag suspicious activity occurring within your payment environment. Using today’s technology, you can easily filter transactions based on their speed, frequency, purchase amount or location.
In 2017, such filters will become more powerful and flexible.
5. Biometric Verification
Many customers already use their fingerprints to unlock their phones, but biometric authentication steps such as iris scanning, voice recognition and DNA verification could all become mainstream technologies within the next several years.
Understanding the Limitations of Credit Card Fraud Prevention
Payment fraud is inevitable, with many believing that it’s simply the cost of doing business. But that doesn’t mean you have to let credit card fraud affect your business.
While it’s true that no single solution can keep you 100 percent safe from thieves and hackers, it’s possible to make your payment environment as uninviting as possible. This is especially true if you select a PCI-compliant processor that specializes in managing payment fraud.
Moreover, failure to implement minimum security steps will make you a much easier target. This is already happening with retail merchants that have yet to adopt the EMV credit card standard. Their stores represent easy pickings for lazy criminals, and this trend will only accelerate as thieves continue to direct their focus toward the lowest-hanging fruit.