Online trading of cryptocurrencies has become a hot market, and the recent online activity driven by Covid-19 fears has only added fuel to that trend. In response, the big merchant processor Worldpay, along with Forter Inc., a provider of fraud-prevention technology, on Wednesday introduced a service that will cover crypto brokers and exchanges for chargeback losses resulting from card transactions used to buy cryptocurrency.
The service emerges as fraud attacks have risen sharply on exchanges. Such attacks soared 90% in money services and cryptocurrency between the second half of 2018 and the same period last year , according to numbers from Forter. As stay-at-home users crowd e-commerce channels during the pandemic, experts expect online fraud in general to rise markedly across sectors. Trading soared last year, with a 600% increase in volume, according to CoinGecko numbers cited by Worldpay.
Now Worldpay says its Fraud Freedom service will use fraud models and artificial intelligence from Forter to help exchanges and brokers pinpoint fraudsters. Meanwhile, Forter says it will indemnify brokers for chargebacks. “Working with Worldpay to bring Fraud Freedom to the cryptocurrency market lets us leverage the strength of our system in a potent arena for fraud, which, in turn strengthens our system with a broader array of payments data insights with a continuous feedback loop,” said Michael Reitblat, Forter’s chief executive, in a statement.
There is no cap on the indemnification amount, Jason Pavona, general manager for North America at Worldpay Merchant Solutions, tells Digital Transactions News.
Worldpay, which was acquired last year in a massive $43-billion transaction by Jacksonville, Fla.-based Fidelity National Information Services Inc. (FIS), ranks as one of the largest merchant payment processors in the world. Last year, it processed 75 billion transactions worth $9 trillion. Now it sees rising promise among crypto exchanges as they contend with increasing trading activity brought on by events such as last month’s halving of the reward for Bitcoin miners, Pavona says.
“The cryptocurrency market is growing rapidly, which is exciting to see, but the reality is that it is a high-risk sector for fraud that demands innovative solutions,” said Shane Happach, executive vice president and head of global e-commerce for Worldpay Merchant Solutions, in a statement.