Payment fraud is the illegal or unauthorized transaction involving the theft of money, personal information, or goods by exploiting vulnerabilities in the payment process.

It works through various methods such as credit card fraud, identity theft, account takeovers, and phishing scams, where fraudsters trick individuals into providing sensitive information or access. To keep your business safe from payment fraud, it is crucial to implement robust security measures like encryption and multi-factor authentication, regularly monitor transactions for suspicious activities, educate employees and customers about recognizing fraud attempts, and stay updated on the latest fraud prevention technologies and tactics. By maintaining vigilant and proactive security practices, businesses can significantly reduce the risk of falling victim to payment fraud.

Reports from 2022 indicate that there were almost 45 million card-not-present fraud occurrences. Payment fraud is the theft of any kind of property or money accomplished via sensitive information exchange. Sometimes these data leaks lead to instant payment fraud. 

This article aims to provide all the knowledge about payment fraud, its mechanisms, and company protection. 

What is Payment Fraud?

Payment fraud refers to any type of illegal or unauthorized transaction performed by a cybercriminal. This fraudulent activity involves stealing money, personal information, or goods by exploiting weaknesses in the payment process

Two approaches of money fraud include phishing and identity theft. Identity theft is the crime committed by someone using the identity, address, or date of birth of another person.

Unauthorized sales closely connect to payment fraud. In this regard, one individual unlawfully gets paid and buys on the owner's behalf without their awareness. Payment fraud has become a topic of worry due to its effects on people's life; so, you should constantly protect your records by using strong passwords and continuously looking for threatening behavior on your accounts. Avoid opening dubious links as well.

In What Ways May Payment Fraud Occur?

Let's grasp the mechanism of payment fraud:

• Phishing: Phishing mostly consists in the theft of sensitive information, credit card numbers, and login credentials — private data. Email and social media campaigns often use this method, in which the fraudster offers a phony payment webpage or login page and consumers fall for this trap and input personal information. 

• Skimming: In skimming, the fraudmer pilfers credit or debit card data. This device logs PIN and card information that might be used to create bogus cards or withdraw money from an ATM.

• Identity theft: Identity theft is the practice of dishonest economic activities using personal data — such as name, address, or Social Security number — of another individual. This might include opening credit cards, making illegal expenditures, or requesting for new credit cards.

• Chargeback fraud: Chargeback fraud is the process by which a customer uses a credit or debit card to make a purchase and then challenges the transaction with their bank because it was faulty or unapproved. The company needs to often refund the cardholder, even in cases of a chargeback and purchase made by the cardholder.

• Business email compromise (BEC): Business email compromise, or BEC, is a kind of fraud especially aimed at corporate staff. Usually a senior executive or business partner, a phony actor, may phony email an employee requesting for sensitive information to be sent or money to be given to them.

• Malware: Malware is any damaging program meant to access private information or take control of a victim's computer or device. Malware is used by scammers to grab credit card information, login passwords, and other sensitive data.

How Can Your Company be Kept Free From Payment Fraud?

These steps can help your company stay free from payment fraud:

• When making NFC contactless payments, EMV chip cards, encrypted online payments, and contactless payments, you are selecting safe payment choices. More modern and safe than magnetic card or debit card payments are these payment choices.

• Use robust authentication techniques: Put in place robust authentication systems, including biometric, so authorized people may access the private information. 

• Companies must routinely check their accounts to be able to identify any odd activity. 

• Teach consumers and staff alike: Instruct staff workers on identifying phishing emails and other dishonest tactics, as well as on spotting odd behavior.

• Use fraud detecting tools: There is a lot of fraud detection software available, which businesses may put on their systems to gather data on dubious behavior.

• Limit access to private data: Businesses should be careful about who among their employees has credit card or bank account access, therefore affecting sensitive information.

• To guarantee they use the finest fraud prevention strategies, companies should keep current on security measures and software changes.  

Make Your Transactions Secure!

Transferra helps you to keep your transfers secure. Should you own a small firm, you should guard against payment fraud. Working with industry leader Transferra, you’re guaranteed the safety and security of payment authentication by means of identity verification and compliance with AML and KYC via face and ID validation.

See the freedom of secure payments by opening your Transferra account right now!