Visa Europe recently released a guide for fraud managers on the future of fraud in a changing payments industry.
The guide, “How to manage fraud in the new world of payments: Six ways in which your job is set to change,” focuses on six areas: active customers, smarter authentication, powerful data, changing platforms, retro fraud and fraud team.
According to the guide, new technologies have allowed Visa Europe to reduce its fraud rates. In 2011, the fraud-to-sales ratio fell below 0.04 percent for the first time, and actual fraud losses also posted a double-digit decline.
The Visa analysis said “a progressive increase in ‘people power’ is set to be one of the defining characteristics of the future of payments,” adding that consumers will become less responsible for actual fraud losses, which could encourage “more and more careless” behavior.
“There is potential to encourage and enable your customers to take a much more direct and active role in your fraud management decisions,” the guide said, pointing to self-service initiatives, validation checks and alerts for Visa accounts.
The guide pointed to the rise of new payment technologies, which will become more sophisticated over the years. Visa said fraud managers can expect to “continually enhance customers convenience” by ensuring the strength of authentication is proportionate to the risk of the transaction.
Big data was also listed among the changes ahead for the payments industry. Visa said businesses that have the ability to collect and process big data “have a definite advantage.”
“As data management and data analytics techniques progressively improve (and come down in price), approaches to customer profiling and transaction scoring can become ever-more effective and accurate,” the guide said.
Visa Europe also said the emergence of new platforms, such as mobile and digital payments, will encourage old and new types of fraud, which must be understood by fraud managers in order to combat fraud and enhance customer service.
“You must understand the inner workings of emerging technologies and appreciate their inherent vulnerabilities,” the guide said. “You can’t afford to be taken by surprise. And you must be prepared to act immediately if any weakness is exposed.”