Feb 08, 2024 MicroBilt News
Payment processors are facing more challenges than ever. Fraud, compliance, and increased competition are all placing more pressure on businesses looking to retain their customers going into the new year. In 2022 alone, there were 1.7 billion in total P2P fraud losses - a 90% increase over 2021. Damaging data points like this are forcing payment processing systems to deliver increased protection, follow stricter compliance, and spend more time to deliver a better and safer product.
While that may be easier said than done, with help from advanced payment processing solutions, companies can make it significantly easier to reach that goal. This article will cover the five everyday challenges payment processors face, and the cost-effective solutions business can use to confront the issue head-on.
Security and Fraud Prevention
Payment processors must continually update and strengthen their security measures to protect sensitive financial data against breaches, hacking attempts, and various types of fraud, including identity theft and card-not-present fraud. Fraud or scam-related reports accounted for more than 15% of all P2P fraud complaints to the CFPB between 2020 and 2022, more than any other type of payment app complaint.
They need to comply with a wide range of regulations, such as the Payment Card Industry Data Security Standard (PCI DSS), anti-money laundering (AML) laws, and Know Your Customer (KYC) requirements. Non-compliance can result in heavy fines and damage to reputation. In the U.S., the CFPB can issue fines ranging from $5,000 per day for any violation to $1 million per day for knowingly violating the law.
Technology and Infrastructure
Keeping up with the latest technology trends and maintaining a robust infrastructure is vital for payment processors to handle high volumes of transactions, ensure uptime, and provide speedy processing. There are products like Risk Verify Database (RVD), which can provide a wide variety of industry-leading tools.
Chargebacks and Dispute Resolution
Chargebacks occur when customers dispute a charge and ask their card issuer to reverse it. Payment processors need to manage these disputes effectively to maintain good relationships with both customers and merchants. One of the primary reasons for chargebacks is fraud, which accounts for 34% of all chargebacks.
Market Competition and Innovation
The payment processing industry is highly competitive, with constant pressure to innovate and offer better services than rivals. Payment processors must regularly enhance their platforms with new features, such as support for new payment methods or improved customer experience.
What's the Solution?
The most reliable method of reducing risk, complying with regulations, and juggling the other growing issues is using a trustworthy, industry-leading data scoring system to ensure the validity of a transaction before it goes through. These tools can:
- Evaluate the risk level of transactions to prevent fraud and minimize chargebacks.
- Identify potentially fraudulent activities by analyzing patterns and anomalies in transaction data.
- Assess customers' credit risk to aid in decision-making for lending or credit extensions.
- Help ensure transactions comply with financial regulations and anti-money laundering standards.
- Create customer profiles based on transaction history for targeted marketing and personalized service offerings.
Knowing that these issues can be a pain point, MicroBilt, a leader in the risk management and data-services industry for over 40 years, developed Risk Verify Database (RVD) to help you gain the upper hand. Built with payment processors in mind, RVD accesses millions of consumer and commercial bank account records to deliver solutions for:
- FCRA compliance standards
- Fraud ID & Compliance
- First Name / Last Name Validation
- Positive / Negative Transaction History
- Return History on Accounts
- OFAC Validation
- and much more!
You may wonder, "Why RVD when several similar products are available? The answer is, "They are pieces of a larger, costlier platform." Other products often require you to cover the entire transaction, including moving the money through them. Not RVD. As a verification-only product, RVD verifies the transaction and allows you to retain your current banking relationship.
MircoBilt also offers solutions or bank account verification and aggregation. Check out Instant Bank Verification (IBV) and easily access up to 365 days of transactional data in the blink of an eye.
No matter the problem or the size of your business, our suite of tools for payment processors makes it easy to find the solution. Learn more about all the services MicroBilt has to offer and keep your business at the forefront of the industry.