Enabling Fraud-Free Transactions in a Digital-First Economy
150 million Americans have experienced credit card fraud. This accounts for almost half of the population and about 65% of credit and debit card holders (security.org). At the end of the day, unfortunately, a merchant doesn’t always know who is on the other side of the computer entering credit card information. When companies have very little information to go from – often no more than the email address a user signed up with – it can be hard to deter malicious intent.
Coupled with the fact that consumers are turning to online transactions at a rapid pace, losses due to fraud are totaling over $12 billion. It has become imperative for businesses large and small to implement fraud prevention strategies to protect themselves and their consumers.
The best and most cost-effective way to combat fraud is to partner with established companies. Through the partnership of Link Money and AtData, you’ll have an easier time preventing fraud from both ends. On the front end with AtData’s comprehensive email-centric data. And on the back end with Link Money and their open banking platform.
Read on to learn how this combined effort can really make a difference in your fight against fraud.
Fighting Fraud Upfront with Data
Even prior to the pandemic we were on a trajectory towards digital-first transactions, and in just a few months’ time, digitization of companies’ customer interactions was accelerated by 3 to 4 years (McKinsey).
With 4.26 billion people – over 50% of the world’s population – using email as of 2022 (Radicati) and total active email accounts close to 5.6 billion (Bizcognia), the email address is becoming synonymous with digital identity. It is the key identifier forming the basis for the way most people are engaging and transacting with the world – through apps, social media, bank accounts, and so much more. Email is the central data element for account creations, account changes, verifications, and transactions. Therefore, it is the most logical data point to detect and stop fraud.
With a solid foundation of comprehensive, accurate email data, organizations can more quickly identify when anomalous information enters their system. Working with an elaborate network of email signals utilizing an established fraud prevention API, such as with AtData’s proprietary email network, is even better. There are machine learning models already built to identify malicious activity at a more rapid pace across billions of data points. This allows for more robust efforts than those built on an individual company’s dataset alone.
Organizations need to focus as their digital efforts are opening them up to increasing risk. They also need to show empathy and concern for the increasing risk of their consumers. And as a company scales, so too does the increased possibility of fraud. A great place to start is with the underlying data, and with the email address specifically.
Fighting Credit Card Fraud with Technology
With most credit card holders having now experienced fraud at least once, it’s time for a better solution so consumers can purchase and transact without the fear their card number is being swiped right out from under them. And with U.S consumers spending a record $1 trillion online in 2022 (Reuters), the solution needs to be digital and easy.
Enter open banking.
Open banking is a system providing access to financial institutions’ transactions and other data in real-time to third-party payment services.
Link Money is an open banking payment provider that employs a heavy arsenal of technology to protect merchants and consumers from fraud. The process is seamless for consumers. They simply select “Pay by Bank” at checkout and then connect directly to their bank account to authorize the transaction. Most consumers already login regularly to their banking app so the process is familiar and comfortable.
How exactly does this help stop fraud?
- Dubious credit card technology is removed from the process. Credit cards can be lost, stolen, skimmed, scammed, or subject to a BIN attack. If a scammer gets a credit card number, they get the keys to the castle, often at the expense of merchants. But when payments go through banking apps, which are password or biometric protected and usually have multi-factor authentication (MFA) enabled, they are inherently more secure.
- Neither Link Money nor the merchant sees or stores any banking login. This ensures consumer information is completely safe and keeps merchants protected against data breaches. Some open banking companies rely on screen scraping or other untrustworthy data collection methods that may collect and store user information. So, companies should be aware and use products built in such a way that it doesn’t need to touch this information.
- With credit cards, a consumer has 180 days to issue a chargeback for any reason once goods and services are delivered. Chargeback abuse is a frequent problem merchants struggle with, and the networks levy steep fines or block a merchant entirely if the chargeback rate is in excess of 1%. With open banking, if consumers have an unauthorized dispute, they must submit a Written Statement of Unauthorized Debit to their bank which carries punishment if fraudulent and decreases the likelihood of friendly fraud.
- Link Money covers funds for certain return codes due to our effective intelligence model. An ACH return code is a message indicating that a transaction has been returned to the originating financial institution, often due to insufficient funds or incorrect account information. A high return rate can be detrimental to businesses, causing lost revenue and resources.
- Impersonation fraud that comes from P2P networks like Zelle and credit cards is a big risk to consumers. Open banking allows a network to thoroughly vet its merchants, which means consumers are protected. This creates a healthier ecosystem overall and builds trust in the payment method.
Combining Efforts to Eliminate Fraud
As the email address becomes more important in the continuing shift to digital, identifying ways to utilize it in fraud prevention strategies is key. The best way to get started is to partner with an established fraud prevention company that specializes in email data. AtData’s network of signals and database will bolster your efforts and greatly reduce the time to implementation.
With Link Money, it’s much more likely that the consumer is who they claim to be because they have the password, device, and often even the biometric information to validate their identity. This creates a more secure interaction between merchant and consumer, without sacrificing user experience. All of that comes at a fraction of the cost of processing credit card payments.
Combining these efforts can really put a stop to potential fraud as AtData keeps an eye out for bad actors and Link Money helps to vet transactions. Resulting in a frictionless customer journey that fights fraud at the same time.
Digital fraud is, unfortunately, too lucrative a business right now and isn’t going anywhere. It’s up to your organization to protect itself and its consumers. Teaming up with established companies like AtData and Link Money will make this task far easier and far more effective.