Comments (0) POS, mPOS and online acquiring, SME

Essential tools to fighting online payment fraud


By Yon Heong Tung for e27

Online fraud is a persistent, major threat to businesses globally. As e-commerce transactions grow exponentially, so has the prevalence of fraudulent dealings. According to a Juniper Research paper, online frauds incurred businesses US$25.6 billion in losses globally last year.

It’s imperative for e-commerce businesses to secure their online businesses against such illegal activities: besides loss in revenue, security breaches erode customers’ trust and cause serious, irreparable harm to a business.

Online payment fraud come in a few variations. One of the most common is phishing — the process where hackers bait users into revealing sensitive information through clicking on malicious links, the hackers then use this information to impersonate victims and make fraudulent transactions.

Other forms include chargeback. Customers initiate an online refund process, charging funds back to the card — but continue to retain ownership of the purchased goods.

Also Read: Online payment 101 for startups

To safeguard their services, merchants need to partner with reliable payment partners that can offer online fraud protection tools.

Braintree — a subsidiary of Paypal — process payments for thousands of businesses around the globe. With billions of transactions, providing a range of online fraud prevention tools is key to protect their merchants.

It includes the implementation of Address Verification Service (AVS), Card Verification Service (CVV) and risk threshold rules. Users initiate an online card transaction and Braintree sends a verification request to the issuing bank, merchants then choose to accept or reject a transaction based on these response codes.

Essentially, these rules ensure that only the authorised users of the credit card can complete the transaction.

Braintree also offers advanced fraud detection tools through its partnership with fraud and risk management AI solutions Kount.

These tools leverage on big data to build tailored security protocols. What Kount does is gather customer information from credit card transactions and verifications created via Braintree’s API and reference them against a large database — across all industries.

Kount is then able to create a fraud score within 300 milliseconds — in other words: real time — and determine whether a transaction is legitimate or fraudulent. Merchants who use Kount’s dashboard to track where transactions are coming from — and pinpoint which regions are most likely to have frauds.

The last tool in Braintree’s fraud protection arsenal is “3D Secure”. This protocol helps to protect merchants against chargebacks. While merchants still need to monitor each chargeback, they can shift the burden of responsibility for such transactions to the customer’s bank.


Besides online fraud tools, Braintree’s e-payment mechanism offers protection against fraud. One of these is tokenisation. What it does is it replaces a card’s information with a 16-digit randomly generated number. This stores all sensitive payment information with Braintree and conceals them from the merchant.

Tools and protocols are essential to combating online fraud; but, the onus is also on the merchant to adopt good practices to cut down on suspicious transactions.

Also Read: How e-payment tech is helping businesses to scale

These include installing anti-virus software to weed out malicious viruses within the system; restricting access to confidential information within the company (more often than not, customer information leaks come from within); and setting up processes that forces a customer to adopt strong passwords (for example, ensuring that passwords are a combination of lowercase, uppercase, symbols and numbers).

Merchants should also implement fraud monitoring and prevention processes to look for abnormal or suspicious orders.

Disclosure: This article was produced by the e27 content marketing team, sponsored by Braintree.

First appeared at e27

Leave a Reply

Your email address will not be published.