Managing Fraud Risk in the Digital Age

People, processes and technologies to address the emerging risks of online and mobile payments

With convenience comes new risk

In the past, consumers used cash, checks and/or credit, debit or prepaid cards to pay for their purchases. They also used money transfer services such as ACH and wire payments, which had a delay in the settlement allowing more time for investigation. Those days are becoming a distant memory as more and more consumers embrace – and expect – the speed and convenience of digital payments, either online or from mobile devices.

New digital methods are reinventing the payments ecosystem. Payment applications such as Google Pay make it quick and easy to move money around the market and across borders. As more and more retailers are adopting various forms of digital payments, they have forced banks and financial entities to adopt alternative payment options. For example:

  • By January 2017, 25 percent of all card transactions in the UK were made with debit and credit cards that use radio-frequency identification or near field communication
    to make fast, convenient payments.
  • In the US, mobile wallet transaction volume is expected to grow more than five times from 2015 to 2019. More than a quarter of US consumers have used at least one mobile person-to-person payment service, with $44 billion transferred in 2015.
  • During the 2016 Christmas shopping season, consumers in the UK used digital payment methods to make 325 million purchases totaling £2.9 billion (about US$3.7 billion) in a single month – up 184 percent from a year earlier.
  • In India, 76.4 percent of consumers have used a smartphone to make a purchase, up nearly 30 percent in one year.

The new ease and speed of digital payments make it more likely for a consumer to make a purchase – a win for the business and the financial institution. But this convenience brings new opportunities for fraudsters, which in turn presents new challenges for fraud mitigation.


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