Rishi Sunak’s 2021 Budget saw contactless card payment limits raised, but this also runs the risk of exposing consumers to increased fraudulent activity. As we enter a world of more online orders, online purchases and remote services than ever before, we realise the pandemic has provided fertile ground for online fraudsters. So, how can payment providers tackle this rise in crime and protect consumers?
The rise of pandemic payment fraud
Trade body UK Finance recently reported that UK citizens were conned out of over a billion pounds in 2020, noting that online fraud rocketed as criminals exploited Brits’ increasing reliance on online banking and online shopping.
With contactless payment usage on the rise as consumers and retailers look for ways to minimise touchpoints during transactions and reduce the spread of Covid-19, the contactless payment limit has now been raised to £100. Such an increase is likely to result in increased amounts of fraud— even if the number of fraud cases does not rise, the losses have the potential to double, while the card data’s attractiveness on the black market will also be doubled.
Tackling the rise in crime
ECOMMPAY’s data shows that record levels of attempted fraud are largely due to merchants’ insufficient knowledge of fraud prevention strategies, and consumers taking few safety precautions, as well as greater activity among fraudsters.
To mitigate this, merchants need to ensure they are not disabling part of the client or customer verification process or allowing people to add an unlimited number of payment cards to one account. Where restrictions aren’t in place, fraudsters can register with their personal card and add stolen payment cards afterwards.
Though merchants are of course seeking to grow conversion rates and attract new customers, this must not come at the expense of customers’ data and money. Those merchants using risky practices to grow their businesses are also at risk of being blacklisted by payment systems and suffering major reputational damage. At the same time, payment providers also have a responsibility to keep merchants educated and informed on risks, and how they can improve their risk control systems.
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Payment providers themselves can also play a valuable role in using risk control systems and machine learning to gather and analyse historical transaction data in real-time. Such technology can be used to identify fraudulent patterns and also understand where fraudsters may be linked to one another- or to their victims. This approach enables payment providers to lessen risks by spotting and eradicating fraud, as well as building remediation plans for each fraud attack.
Risk Control Systems experts or antifraud specialists are especially important for monitoring suspicious activity flagged by smart AI technologies and deciding whether to process or block a transaction. Combining technologies as well as expert support can facilitate a fraud detection rate of around 97%.
Moving forwards, it is clear that contactless payment methods are here to stay, which means the finance industry must work to educate businesses and the end-consumer on how to reduce the levels of both online and offline fraud. Compliance and financial intelligence teams will need to adapt to deal with increased volumes of contactless transactions, and technological innovations can help to ease this burden and reduce fraud. Working with trusted payment providers who are leveraging technology to reduce risk and minimise fraud will be a crucial step in the battle against criminals.
Written by Paul Marcantonio, Executive Director – UK & Western Europe at ECOMMPAY