The payments industry is still trying to get its arms around the long-running problem of credit card fraud. Experts estimate that losses will reach $165 billion in the next decade for the U.S. market alone. With so much at stake, providers must do everything in their power to protect the point of sale from attack and make payment security their No. 1 priority.
Types of Fraud at the Point of Sale
The term “fraud” covers many malicious activities, applying to how bad actors try to get one over on credit card companies and their customers.
The advent of EMV security standards brought the hammer down on what used to be a commonplace form of point of sale (POS) fraud. In the 12 years since EMV protocols became the gold standard, instances of criminals stealing and counterfeiting plastic cards, or using them without permission, have seen a sharp decline. While that’s great news for businesses that have adopted EMV rules, merchants dragging their feet on following these best practices leave themselves wide open to fraud risk from card skimmers looking to score easy money.
These days, chargeback fraud is a bigger headache for merchants with up-to-date payment technology. This is the harder-to-fight gray area when people go to their bank instead of the merchant when disputing a payment for something they legitimately purchased. Because small businesses face an uphill battle trying to disprove chargeback claims and often lack the resources, staffing, and time necessary to devote to these issues, some might give up on fighting back. But waving the white flag isn’t always the right answer because merchants with too many chargeback complaints could be branded high-risk and pay higher payment processing fees.
Online fraud is another area of concern. These days it’s all too easy for hackers to get their hands on stolen credit card account credentials on places like the dark web. But how successful these fraudsters are when trying to use the stolen goods depends on the security systems at play in a merchant’s payment platform. Sites fortified with fraud prevention tools that safeguard against cyberattacks can render stolen logins useless.
Advances in Security
Though fraud is an ongoing problem, there are things providers can do to help their merchants enhance their payment security profile.
Consider some of the leading encryption solutions available on the market and which one might be right for your clients. Some prefer reducing the PCI scope of compliance by going with PCI-validated point-to-point encryption. This option secures payment transactions by encrypting data in the POS device. Another option would be encrypting payment data outside the POS hardware, known as end-to-end, or E2E, encryption.
You can also help merchants fight fraud with solutions that leverage databases of valuable intel on whether cardholders are repeat offenders when filing chargeback complaints and committing other types of online fraud. Service providers can also take advantage of different tools to strengthen payment security. For example, they can look at historical data for clues, implement technologies to authenticate users, deploy pattern-recognition software, and invest in educating and training stakeholders.
New Regulations and Standards
There are other changes at play in the payment security sector. The PCI Security Standards Council will sunset the PCI Payment Application Data Security Standard this fall, replacing it with the Software Security Framework tailor-made to address the needs of today’s payments architecture and counter sophisticated cyberattacks.
SSF defines the security features that payment software must have but takes a different approach to security than PCI DSS. This enables faster time to market and security validation. SSF includes PCI 3-D Secure and the customized approach of PCI DSS v. 4.0, recognizing multiple ways to satisfy security objectives. Now is an excellent time to ensure that your software meets SSF requirements.
Adapt to Survive and Thrive
Trends in online fraud are constantly evolving, but players in payment security must stay one step ahead. With the security standards and available technology continually being revisited and refined, vendors must stay on the cutting edge and keep merchants up-to-speed on the newest developments.
Contact Datacap today to learn more.
