Video: Battling Fraud in a New Age

Fraud – For those of us in the payments industry, it's the dark, scary monster under all of our beds.  

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Battling Fraud in a New Age

Feb 8, 2016

Video: Battling Fraud in a New Age

Fraud – For those of us in the payments industry, it's the dark, scary monster under all of our beds. And TSYS® experts devote countless hours to answer these key questions:

  • How do we prevent fraud without impacting customers?
  • How do we mitigate it while also providing a great customer experience?
  • And how do we anticipate it?

The landscape can be a bit deceiving – with the recent EMV® chip card rollout in the U.S., some thought fraud concerns were a thing of the past. In fact, nothing could be further from the truth. We've seen time and time again that fraudsters simply evolve and come up with new ways to access cardholder data. And one of the primary ways they're adapting to new security measures is with card-not-present (CNP) or online transactions.

We're also seeing a rise in counterfeit fraud across the U.S. as fraudsters make a last-ditch stand before the full implementation of chip cards and acceptance terminals. This means our focus on counterfeit detection strategies and technologies to prevent and mitigate CNP fraud must persist to combat new fraud trends.

Fraud prevention

The bottom line is that traditional approaches to fraud prevention are just not effective in today’s payment landscape. Basic 3D-Secure (Verified by Visa® and MasterCard SecureCode®) technology with static passwords that are easily compromised or reset presents barriers to customer use and is no longer effective as the main line of defense in CNP fraud prevention.

Instead, we are transitioning to new 3D-Secure solutions that use sophisticated modeling and big data insights behind the scenes to offer truly effective fraud prevention and a frictionless cardholder experience. New generation adaptive analytics detection models – designed to adjust to evolving fraud trends – "learn" cardholder behavior in real time without unnecessarily affecting legitimate cardholders at the point of sale and without requiring additional operational resources.

Mitigating fraud

When fraud does occur, handling it quickly and decisively is crucial to turning a bad event into a positive cardholder experience. It's important to have in place an information-sharing network that creates a collaboration portal for participating issuing banks and merchants for quick fraud resolution. Direct merchant action and fewer chargebacks lead to reduced operational expenses and a positive customer experience.

Anticipating fraud

It is essential to recognize that fraud will continue to evolve. Adaption and anticipation are crucial in preventing fraud attacks. Innovation in technologies like biometrics continues to develop, and we are seeing these emerging technologies in areas from initiating and authenticating cardholder transactions online or in-store to securing cardholder accounts and verifying identities.

We can't predict the future. Yet one thing we can be sure of is that fraudsters will track emerging prevention and detection technologies while continuing to innovate to perpetrate their crimes. One tool is not enough.

While there is no silver bullet for preventing and mitigating fraud, we must remain forward-thinking and agile in deploying multiple layers of defense while staying focused on delivering a superior cardholder experience. It's a finely tuned balancing act, but one on which our focus is well-placed in protecting our customers and the consumer.