Fraud Prevention through Secure Payment Processes

  • Richard Marley
  • December 12, 2017
  • 6 minutes read
  • 3687

Here’s a question, why do people always say things like  “the good days”? The fact is a number of people find that new technology and game changing ideas bring new problems, issues and dilemmas. In the good ol’ days you had to sweat more to get work done but it was simple and straightforward. Same is the case with fraud prevention and identity management.

To put this into perspective let us refer to the story of Jack, a website owner who has about had it with chargebacks due to the use of stolen credit cards. He runs a successful hardware store but he saw that some of his customers were preferring the online method where they could get the things delivered to their doorstep. He had an e-commerce website made to cater to the people who preferred to order online. Everything went smooth at first as he had included most of the safeguards such as a secure connection and the proper requirements and payment gateways to collect the payment from the customer. But when he started getting chargebacks that’s when out of frustration he referred to the statement above. He referenced the fact that at the store he had a couple of shoplifters which he caught eventually but never a payment fraud. He said he accepted cards, he could verify the signature on the back and sometimes the cards had pictures and he could match those. He even mentioned that once he found someone suspicious and politely asked them to pay in cash since the card machine was not working. He says with everything online what can one do? The person who used the stolen card gave a fake address and contact number. In this case how can a website owner secure themselves against a credit card scam?

Are Secure Payment Processes the Best Tool for Fraud Prevention?

In the scenario above, when we look at the argument, it seems that, yes, the old times were less complicated. New tech has brought its own set of problems, but with that, solutions for those problems were also found. The answer came in the form of third-party verifiers that vouched to provide secure payment processes. As mentioned in the scenario the website owner could not verify if the card actually belonged to the person who was using it. What if that were possible in the online world? The answer is yes, it is possible; these online verifiers use the World Wide Web, the customer’s webcam or smartphone camera and verify the details on the card by asking for proof of identity such as an ID card or passport. They match the names, the picture on the ID card/passport to the actual person’s face. If they all match up it Okays the transaction and allows it to proceed.

If you look at it from the perspective of the website owner this is just what the doctor ordered — a fraud prevention system. This is the solution to Jack’s online problem, besides that he also has a proof of purchase to dispute any false chargebacks as the verification service providers also give pictures of the verification or even a video of the entire process with the customer.

Can Secure Payment Processes Counter Money Laundering?

Another aspect that is equally important is that of money laundering. The governments of the world as well as all financial regulatory bodies don’t take lightly to money laundering. If a company, business or financial institution is found guilty of direct money laundering or even aiding and abetting then they are in a lot of trouble. Such businesses or financial institutions suffer heavy fines and even be closed down with prison-time for the owner depending on the severity of the money laundering case. Some companies that provide Secure Payment Processes also provide services that do background checks as well as the regular identity checks. Their system does a thorough check of databases of global watch-lists. They hold information regarding known and suspected money laundering individuals, groups, companies, etc. Known as a digital AML (Anti-money Laundering) service. Having onboard a company that provides both services — online identity verification and anti-money laundering — is truly a powerful fraud prevention system.

Jack Knows What He Needs to Do Now, but How to Choose the Right Company?

When Jack found about the companies that can offer a solution to his chargeback woes, he couldn’t be a happier man. When he went online, that’s when he started scratching his head seeing all the companies out there. Not knowing what things to look for can make choosing a good company a confusing and tedious task. Let us see what to look for in a good company that provides Secure Payment Processes.  The first thing to look for is speed and ease of use. If a process is too complex and takes too long, then people just lose interest that causes loss to the business. The best ID verifying companies have verification times in the seconds. Another thing is that most of the providers are powered by an advanced AI that does automated checks of the documents as well as picture and face matching. The better providers go a step further they add HI (Human Intelligence) to the AI. Live people check the results of the AI for false positives. The entire process by both AI and HI takes less than a minute. The features and options that a fraud prevention provider gives should be scrutinised as this makes it easier to judge if they are giving good value for money or not. Good providers allow for online as well as offline checking so that if a client wishes to offer their customers the ease of offline submission of documents and pictures they can do so. Also, if the provider offers digital AML services then that is definitely the cherry on top. The last but the most important thing to look for is if the company is compliant with the latest industry standards and policies. As partnering with non-compliant companies can result in heavy fines and other penalties for both the digital AML service provider as well as the company that has hired them. An example is the GDPR policy for companies that are handling the data of European citizens.

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