Payments Protection


Four emerging defenses for fighting electronic payments fraud

By Mannie Da Silva

Financial institutions are fighting a growing threat of electronic payments fraud across a range of payment channels. As fraudsters become more sophisticated, financial institutions must keep pace. Detection and prevention of electronic payments fraud in real time provide a more robust defense against cybercriminals while also yielding faster, more convenient services for customers.

To effectively combat payment fraud banks must move to detection and prevention systems that enable automated, real-time monitoring of a customer’s entire scope of financial activities, including online and mobile. This demands vigilance over multiple payment channels that are tightly integrated with account processing platforms.

Here are four new technologies and methods that banks are using to mitigate electronic payments fraud risk.

1. Analytics and predictive modeling. Data analytics integrate a range of transactional, institutional and customer-level data—painting a deep picture of a customer’s normal behaviors. One case might be if a customer, with no history of international wire transfers, suddenly initiated a high-value transfer to a foreign bank. An alert can be generated immediately, forwarded to fraud analysts and investigated in real time.

Additionally, predictive modeling uses pooled data of electronic payment transactions and fraud to help banks identify fraud patterns and transactions that have similar characteristics. This keeps criminals from using similar fraud techniques multiple times and maximizes the potential worth of previously collected data.

2. Risk indicators and scoring. Effective payment fraud systems need to consider risk indicators, such as sudden changes in payment types or channels used by customers, and generate an overall risk score for each transaction.

Customized scorecards enable banks to fine-tune their “decline, hold or approve” strategies, thus reducing false positives for flagged transactions. The best fraud prevention systems help banks quickly respond to “flash fraud” transactions by identifying and restricting the offending activity in real time.

3. Multichannel detection and prevention. Increasingly, fraudsters coordinate attacks via multiple channels in an attempt to overcome traditional detection systems. To achieve multichannel coverage, financial institutions are adopting fraud-prevention solutions that assess customer activity across all payment and interaction channels, including online and mobile, and integrate with their core payments platforms.

4. A changing landscape. New payment channels—and opportunities for criminals—are emerging every year. To identify and defend against evolving fraud, banks need advanced systems that accurately evaluate the risk of transactions across a full range of mobile and electronic payment channels.

To optimize fraud prevention, banks are integrating their payments fraud systems with other fraud prevention systems, thus enhancing their overall data security capabilities. At the same time, automation of fraud detection and prevention processes is helping banks maximize operational efficiency and ensure that all cases of fraud are effectively managed and resolved.

Mannie Da Silva ( is global product line manager, financial crime risk management for Fiserv Inc. in Brookfield, Wis.