Using AI to Prevent Ecommerce Fraud and Secure Payments

As e-commerce continues to grow exponentially, fraud within these channels is also on the rise. In fact, credit reporting agency Experian reports that there’s been a whopping 56% increase in ecommerce breaches since 2016. The prevalence of digital payments and transactions, coupled with the number of consumers gravitating to apps and mobile connectivity, has led to criminals devising newer, more sophisticated methods of stealing money.

Fortunately, there is a solution. Artificial intelligence (AI) and machine learning are increasingly alleviating the fears of merchants, PSPs and ecommerce companies who are being plagued by an array of cyber attacks. In fact, these technologies have become critical tools in the fight against fraud in the continuously evolving payments and transactions industry.

Most anti-fraud systems that flag suspicious behavior (for example, unusual payments to remote suppliers, or credit card purchases that take place outside a customer’s country of residence) are “rules-based.”  This means that they detect fraud by measuring transactional activity against several pre-determined rules that humans have created by combining data about previous fraud with intuition about what constitutes “normal” buyer behavior. Although effective to some degree, this approach can be costly and slow, with high false positive rates and no way to identify new, emerging fraud patterns.

Machine learning, on the other hand, uses self-learning algorithms to integrate and analyze massive amounts of evolving, fast-moving and unstructured data.  These algorithms can detect fraud in real-time, learn from trends, automate tedious tasks, and effectively identify new fraud patterns.

While AI and machine learning are important developments in the fight against fraud, the role of humans in securing the omnichannel ecommerce space should not be underestimated. Machines can identify signs of fraudulent activity, but it’s up to analysts to act on them. This is especially important in today’s omnichannel retail environment, where chargebacks caused by fraudulent activity can have a negative impact on the touchpoints that connect buyers with sellers.

Today’s cyber-criminals know the ins and outs of payment processes and can easily locate vulnerabilities through distributed networks and the dark web.  They then employ multiple sophisticated tactics to exploit these vulnerabilities, including but not limited to identity theft, phishing and account takeover. According to Nielsen Report, fraudsters steal about 5.65 cents for every USD 100 spent!

As online fraud continues to evolve, machine learning is proving to be the most effective method that ecommerce constituents can use to protect themselves. Robust and user-friendly, it secures vulnerabilities by monitoring real-time customer behavior, and helps companies with better and more effective decision-making. From identity verification and payment authorization to checkout scoring and merchant underwriting, its applications are limitless. The underlining result is a significant reduction in fraud loss and chargebacks.

7 Tips to Prevent Chargebacks

Chargeback management – not quite the two words that invoke happy thoughts and feelings among merchants. There are many reasons chargebacks arise and, in some cases, it is not always something the merchant can control.  Examples of chargeback triggers include: Fraud Customer disputes Processing errors (e.g: duplicate transactions) Authorization issues (e.g: debiting cardholder) It is […]

Continue reading...

Faster-time-to-Money: The Name of the Game for Small Businesses

Lars Pedersen, CEO of Creditcall, shares his insights on SMEs growth within the payments industry. The SME market continues to be underserved by payment institutions, still not having the same tech solutions as larger companies. Their top pain point and frustration is delayed or fragmented payment solutions. More often than not, SMEs still use non-integrated […]

Continue reading...

PSPs are Adapting to Cross-Border E-Commerce

This month, Credorax has been spotlighted by PaymentEye to share its wisdom on cross-border ecommerce’s effect on PSPs. Below are a few important takeaways from the article we thought you would enjoy. To read the full article, visit: Retail Sales, All-Time High Retail sales worldwide are at an all-time high. According to data from […]

Continue reading...

Client Advocacy Proves More than a New Year’s Resolution, but a Mantra to Live by

For many of us, the beginning of a new year is typically a time when we set personal ‘New Year’s Resolutions’.  Just as we do this for ourselves, it is important for businesses to set them as well, in early Q1 each year. Confucius had it right when he professed, “study the past if you […]

Continue reading...

5 Pieces of Advice for Merchant Onboarding Application

merchant onboarding application acquiring bank

To date, the merchant onboarding process to an acquirer has been time-consuming, inflexible and costly. The biggest cause of delays and frustration is the overwhelming amount paperwork that needs to be completed. As an acquirer dedicated to customer advocacy and operational efficiency, we decided to share with you, our merchants and partners, how putting together […]

Continue reading...

Keys to Cross-Border Success for Merchants

Are you watching the world grow more connected before your eyes? It’s only natural that online merchants see this growth as an opportunity. Increasingly, it is becoming vitally important that online merchants be fully prepared to sell not only “locally” but also to reach into cross-border commerce. has been studying factors that separate the […]

Continue reading...

Survey Says: U.S. Consumers & Businesses Alike Demand Pragmatic Fintech Solutions to Ease Their Financial Woes

Ringing in the holidays, means nearing the end of year, and at Credorax we decided to take a moment to reflect on the major transformation the fintech industry experienced in 2016. While Blockchain and IoT obviously made every Top 10 Trend List, let’s be honest, the biggest trend – or more bluntly put, game-changer – […]

Continue reading...

New study: B2B Digitalization Drives More Revenue

When it comes to embracing change, B2B is following – slowly – in the footsteps of B2C. Businesses that are focused on B2B have to overcome more hurdles to make those changes, including legacy systems and more traditional processes.

Continue reading...

Merchants Will Become the Real Drivers of Change in the Payments Ecosystem

Editor’s note: What trends lie ahead for the payments industry in 2017? We’ve invited Kieran Hines of Ovum to highlight some important ideas for the coming year. Are you ready for retailers’ needs to shape your payment services practice? See what our guest blogger has to say. As we closed 2016, it became very clear […]

Continue reading...