As the e-commerce industry continues to grow and more people shop online there is no doubt that scammers are continuously finding new ways to defraud businesses and shoppers. But this isn’t just a South African problem. According to Statista, e-commerce losses to online payment fraud were estimated at 41 billion U.S. dollars globally in 2022. The figure is expected to grow further to 48 billion U.S. dollars by 2023.
This is why it is important for any business, and especially smaller businesses, to be prepared and educate themselves around different types of fraud and what to look out for. Peach Payments Fraud and Risk Manager, Tegan Borchert, points out the main ways to prevent fraud as a small business:
1. 3D secure can mitigate unnecessary losses
What is 3D secure? According to Xneelo: 3 Domain Security (3D Secure) is a service facilitated by Visa and Mastercard to protect card owners from unauthorised online transactions by requiring a One Time Pin (OTP) for each online transaction. When a payment is approved by the issuing bank the payment may not be charged back/reversed which in turn protects the vendor. 3D Secure is activated with ABSA, FNB, Standard Bank and Nedbank.
Ensuring that your site is 3D secure means that all payments made are required to be authenticated by the card holder before they are able to finalize their payment, thus eliminating the risk of chargeback fraud and eliminating any unnecessary losses to your business.
2. Be on the lookout
Tegan says, “Remember that you know your business best. You know the type of transactions you would usually receive, the volumes and the transaction amounts.” This means that businesses should be able to recognize anything out of the ordinary by keeping an eye on transactions coming from your store. High value orders should be reviewed carefully. The quicker business owners are able to identify these possible fraudulent transactions, the quicker they can act and prevent these from occurring in the future.
3. Choosing a reputable payment gateway gives you and customers peace of mind
One of the most effective ways to mitigate the risk of fraud when starting an online business is to ensure that a reputable payment gateway is used. A payment gateway offers a secure checkout for both your store and your customers and can offer you real-time checks to screen transactions, proactively identifying and preventing any fraudulent behaviour. “They can also help prevent any repeat offenders by blocking their cards. As the saying goes, prevention is always better than cure.” says Tegan