When one sees a sudden spike in fraud, the instinctive response is to do whatever’s necessary to make it go away. It’s not as simple as a change or two at the merchant level. Contending with fraud calls for broad industry solutions.
Predictive analytics, for example, are a vital component to more adept fraud identification. Issuers and card schemes should embrace wider use of predictive analytics to better pick up on trends in fraudulent activity. Artificial intelligence software could even be used to analyze and score credit transactions as is done for banking transactions.
That said, there’s still no one-size-fits-all answer to the problem. Food and beverage merchants must have an efficient fraud detection system in place to stop bad transactions from going through, and each business and each individual fraud source demands a unique solution. This calls for a multilayer strategy.
Geolocation, device fingerprinting, Address Verification Service (AVS), dynamic fraud scoring and more are part of an adaptive solution for criminal fraud. Of course, none of these tools can address friendly fraud, which is where chargeback management and representment come in.
When deployed properly, these tools work in tandem, detecting threats from multiple sources. They won’t increase friction, and thus won’t result in lost sales due to making ordering more difficult. When in doubt it’s best to err on the side of caution. A card decline may mean a lost sale, but it can also mean preventing a fraud incident.
As payments in the food and beverage vertical continue evolving, fraud tactics evolve right alongside them. Merchants—and the businesses who serve them—need to be prepared to take on this challenge.
