Ways to Fight Online Payment Fraud

Blog / Ways to Fight Online Payment Fraud

Nowadays, financial crimes related to online payments are on the rise, and these crimes are becoming much more complex with the advancement of technology. With the effect of COVID-19, online payment services are used frequently, especially these days, and so these services are developing. It is undeniable that while services have improved this much, so has online payment fraud. There are many ways and types of Online Payment FraudCorrespondingly, there are many ways to prevent these crimes.

What Is Online Payment Fraud?

Online payment mainly refers to money exchanged electronically. Online payment transfers monetary funds from the customer's credit card account to the selling company's bank account. Online payment services are beneficial and preferred by a person with technology development. However, although it has many advantages, It also has the disadvantage of cyber criminals as a potential target for conducting fraudulent activities. Therefore, businesses need to protect themselves and their customers from these fraudulent crimes. So what exactly is this Online Payment Fraud?

Any illegal online transactions performed by a cybercriminal are called Online Payment Fraud. Online payment fraud can also be called e-commerce payment fraud. Victimized online customers often suffer from their money, sensitive information, or personal property. Online payment fraud has become more common after e-commerce platforms have become so popular. People do not have to spend too much time on what they will buy through online payment services, and they often prefer these facilities. Cybercriminals use many methods to capture information people enter on sites while shopping, such as credit card information. Businesses also need to take precautions against these frauds to protect themselves, protect their customers, and provide them with the best experience.

Types of Online Payment Fraud

Criminals use many ways to commit Online Payment Fraud. With the development of technology, the methods they use are increasing and developing; some of these ways are:

Merchant identity fraud:

With this method, cybercriminals open a legitimate merchant account and collect the credit cards they stole. After committing a fraudulent transaction, cybercriminals try to disappear before cardholders notice fraudulent payments and cancel transactions. In such a case, the platform from which the payment was made will be liable for damage and all additional charges associated with credit card chargebacks.


Bank accounts, credit cards, login credentials, e-mails containing and requiring personal information, and websites are tools criminals use to phishing. The reliability of the platform they are trading with is essential for people. Nobody wants to share their personal information or card information with a site they do not trust. If websites look unfamiliar or unreliable, phishing can occur.

Identity theft:

One of the common types of online scams is identity theft. Cybercriminals can steal personal information from people who cannot take any action on online payment sites. Cybercriminals steal this information, especially from people who transact in firewalls, sites that use old security systems, and people who use public Wi-Fi. 

Money Laundering and Online Payment Fraud

One crime that underlies most crimes is money laundering. Criminals use money laundering techniques to hide the true sources of funds they obtain from a particular crime. Therefore, businesses should also anti-money laundering activities to prevent online payment fraud. As a result, if the money obtained when fraud occurs cannot be laundered, the criminal is caught, and the crime is detected and prevented. That is why Online Payment transaction providers have to take precautions to prevent cybercriminals from misusing their services for money laundering. Unfortunately, online Payment service providers can participate in these activities, albeit unwillingly; businesses should prevent this; otherwise, businesses will be subject to regulatory penalties, but they may also lose the trust of their customers.

Especially for Online Payment service providers working globally, it is tough to keep everything safe manually, and traditionally, many transactions can take place within a minute. Therefore, it is necessary to check instantly who is doing these transactions and whether there is a suspicious transaction. Regulations provide businesses with certain obligations to prevent Online Payment fraud, such as AML and KYC procedures. Institutions that do not comply with these obligations are punished due to regular inspections.

Know Your Customer (KYC) to Prevent Online Payment Fraud

AML and KYC procedures have to be applied in regulated sectors. Online Payment Service Providers may also be among the regulated industries and thus can implement these procedures. Businesses are also performed in Know Your Customer to identify customers and understand their risk. Know Your Customer (KYC) procedures are designed to anti-money laundering and provide detailed information about the customer. KYC aims to do business with real customers and partners and protect against ML / TF risks. KYC is carried out in customer purchases, at the beginning of the partnership, and at specific time intervals to ensure that cybercriminals and fraudsters cannot create an account. The main reason for it to be carried out regularly in a certain time period is that the existing risks may change.

Implementing effective authentication solutions is the first step in managing payment fraud. To perform effective screening, the first requirements of organizations are the seamless configuration of in-house due diligence and screening procedures. With Customer Due Diligence (CDD), customers' risks are determined, measures are taken, and Enhanced Due Diligence (EDD) procedures are performed for more risky customers. For greater security, machine learning and behavioral analytics can be used in organizations, and with these technologies, organizations are far ahead in protecting themselves from anti-financial criminals.

Sanction Scanner Solution

With its strong API support, Sanction Scanner automatically performs all AML check online processes of organizations from opening a customer account to customer transactions within seconds. Sanction Scanner features a global sanctions database, PEP, blocked contacts, and searched lists. AML Name Screening Software can perform their obligations' required CDD and KYC transactions. Furthermore, Transaction Monitoring Software can automatically detect high-risk and suspicious activities so that Online Payment Fraud is detected and the damages caused by these crimes can be minimized. For detailed information, you can contact us.

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