How Businesses Can Prevent Payment Fraud in 2020
Updated: Jun 30
With holiday shopping in full swing, record numbers of buyers are doing their gift buying online. This year alone, there are expected to be nearly 2 billion eCommerce customers worldwide, up from 1.3 billion just 5 years ago. The total value of their transactions? $3.45 trillion, up from $1.34 trillion 5 years ago and $2.84 trillion in 2018!
Since the first fully online payment was made in 1994, a lot has changed. The pace of change has sped up in the last decade with the online buying experience shifting from a multi-page check-out process to single-click, shopping cart free purchases.
Helping drive this growth are the efforts of both retailers and financial institutions to tailor a better buying experience for the customer. The easier a buyer can act on their impulse to buy, the more likely they are to complete the purchase. This should seem obvious – it’s why chocolate bars are in your grocer’s checkout aisle.
Banks and credit card companies have helped make eCommerce even easier for customers by greatly reducing the customer’s liability when they fall victim to scammers. When a buyer’s card is used for fraudulent transactions, companies like Visa and MasterCard simply remove the fraudulent charges from their statements before canceling the card and quickly issuing a replacement.
Of course, someone is stuck covering the cost of these fraudulent expenses, and in the case of online payment fraud, that cost often falls on the merchants. According to a joint study by the Visa, MasterCard, and American Express, online fraud in Canada increased from $141 Million in December 2009 to $537 Million in 2015 (the most recent year numbers were published for).
Because of this, the Government of Canada’s Canadian Anti-Fraud Centre has issued a list of red flags it recommends Canadian eCommerce businesses watch for when accepting purchases. These flags are characterized as either “order flags” or “delivery flags”.
Product / Order Flags
Larger than normal orders
Many orders for the same product; especially "big ticket" items
Orders from repeat customers that differ from their regular spending patterns
Orders using the same customer or payment information, but many IP addresses
Customer requests "rush" or "overnight" delivery
Single payment information used for many shipping addresses
Billing address different than shipping address
Request that extra funds be sent to a third party
These red flags are important, but merchants can find it overwhelming to watch for them while managing their firm’s day-to-day. So what else can Canadian merchants do to protect themselves against scammers? Find a payment software company that handles fraud detection and provides more secure eCommerce payment software.
This may be surprising, but many eCommerce payment software providers don’t do the proper due diligence in checking for fraud, and as a result, businesses who use them experience higher rates of fraud and losses from charge-backs.
Canadian eCommerce payment software providers like Vaughan Ontario’s Apaylo use advanced data analysis to prevent fraud. Using time-tested methods of identifying fraudulent purchases, with data-rich directories and digital ID services that allow Apaylo to confirm who customers are, Apaylo’s payment software helps Canadian eCommerce merchants focus on what they do best: running their online businesses.
Click here to learn contact us and learn more about Apaylo’s payment software and eCommerce merchant services