Digital Transactions Authoritative, insightful and timely information for payments professionals
As the digital economy continues to grow, people are relying on virtual transactions more than ever. But with the expansion of digital money movement comes new opportunities for fraudsters to exploit merchants and their customers.
In today’s economy, fraudulent activity can happen anywhere, to just about anyone. Digital cybercriminals are continually adopting new tactics to find new ways to scam consumers and merchants. And when those evolving tactics succeed against merchants, they can have serious consequences – from lost sales to lost customers and long-term reputational harm.
Sacrificing reliability or security isn’t a sustainable option for merchants when processing transactions, and not all networks are created equally. While fraudsters continue to look for new methods, Visa is working to protect merchants by keeping all types of fraud out of the payments ecosystem.
The Many Forms of Fraud
Fraud takes many forms in today’s digital economy, and it doesn’t always require a high level of sophistication to be successful, as revealed in Visa’s recent Biannual Threats Report. Simpler fraud schemes such as skimming operations and ransomware-as-a-service exist to sell pre-packaged stolen data or threat software to individuals and make fraudulent charges or launching an attack easier.
More sophisticated fraud schemes like enumeration attacks increased 40% between January and July of this year, with the U.S. being the most heavily targeted region globally from both the acquiring side (54% of total acquiring enumeration) and issuing side (39% of total issuer enumeration). The Visa Account Attack Intelligence (VAAI) capability monitors for these enumeration attacks and notifies affected acquiring banks and merchants instantly, helping them avoid losses.
Not all fraud is as sinister as stolen account numbers or identity theft. Friendly fraud, or first-party misuse, is a common scheme where cardholding customers dispute legitimate purchases with a merchant or issuer. Friendly fraud accounts can look as simple as disputing a valid purchase, charges for a forgotten subscription plan or failing to return within the policy window. Merchants can often absorb the loss regardless of whether the customer who is disputing the charge has bad or honest intentions.
Earlier this year, Visa took action to help merchants fight back against friendly fraud by implementing new parameters to its dispute program. With these changes, merchants can provide additional data and evidence to prove a valid charge against the disputer, which could save small businesses over $1 billion dollars globally over the next five years.
Visa’s Priority: Paving a Frictionless Path to Secure Payments
End-to-end digital transactions are becoming the new normal as consumer preferences shift to online purchases, contactless payments and smartphone wallets. Taking extra precautions to secure accounts, using tokenized payments and digital wallets and isolating payment systems from other programs are all ways merchants can protect themselves. However, to keep up with the revolving door of cybercrime, payment networks need to invest their own resources – dollars, brain power and technology – to keep transactions secure.
Over the past five years, Visa has invested more than $10B in network security and artificial intelligence, with more than 1,000 dedicated specialists monitoring payment activities 24/7. And those investments are already paying off. Last year, Visa’s technology helped to prevent an estimated $27 billion in fraud, and an additional $30 billion in the first half of this year alone. Today, less than one tenth of one percent of volume transacted on Visa’s network is lost to fraud. That means merchants can keep their businesses running smoothly and at peak performance, allowing them to close more sales and provide their customers with the great buying experiences they expect.
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