How to Fight Ecommerce Fraud with Payment Orchestration ?

As per a recent IBM report, businesses in the Middle East had to pay a price of SAR 29.9 million due to data breaches in 2023. In a Deloitte report from 2021, around 48% of the organizations in this region observed a rise in fraudulent activities compared to previous years and 35% felt that the pandemic was a key trigger. While online transactions skyrocketed around this time, making life easy for countless people, and helping businesses survive, there was a not-so-bright side to it all. Problems like identity theft, chargeback fraud, credit card fraud, and phishing reared their ugly heads more boldly than ever and continue to be a challenge for ecommerce merchants. However, hope comes in the form of fraud prevention through payment orchestration.

A payment orchestration platform can increase the efficiency, speed, and safety of your entire payment cycle, while enhancing the customer’s checkout experience. By bringing together different banks, payment service providers, apps, and acquirers on one platform, payment orchestration offers more options to customers, routes every transaction effectively, and settles your dues on time. You can accept multiple currencies, foray into new markets and geographies, comply with different regulations, and enjoy better visibility into your finances. Most importantly, you can detect and prevent frauds more accurately, thereby winning customer trust and loyalty. Let’s learn more about payment orchestration and how it is instrumental in securing your sensitive data.

Decoding Payment Orchestration

If you are planning to use payment orchestration for secure transactions, first understand how the technology works.

Step 1

After adding one or more items to their online shopping cart, a customer heads to the checkout page and picks a payment method from multiple options. They might also use paylinks, especially while paying for utilities or insurance premiums.

Step 2

The payment orchestration platform then collects payment details, encrypts the same, and sends it to the relevant gateway.

Step 3

To lower the chances of false declines, the orchestration platform routes the payment request to multiple processors. If one processor fails to authorize the transaction, another processor handles the request.

Step 4

Upon receiving the payment details, the acquiring bank gets in touch with the issuing bank for verification and authorization. Post payment approval, an authorization response code is sent by the acquiring bank to the gateway as well as you, the merchant.

By leveraging an intelligent routing process and numerous payment processors, the orchestration platform boosts acceptance rates, customer satisfaction, and sales, and minimizes the overall transaction cost.

Role of Payment Orchestration in Fraud Detection and Prevention

 The best payment orchestration platforms, like PayTabs, are armed with cutting-edge machine learning and artificial intelligence tools that can spot suspicious or malicious activities easily and quickly. It prevents fraudulent payments from getting processed or approved. Additionally, you can access and implement sophisticated security protocols, like the ones detailed below:

1. Tokenization

This cybersecurity technique uses a token, or a random and unique group of characters to replace sensitive payment details like credit card numbers. This means, the actual information on the card never gets stored, transmitted, or utilized. So, if someone with fraudulent intent chances upon the token, they won’t be able to use it, decode the real data, or buy products or services with the token. Though not all payment gateways come with the tokenization feature, if you use payment orchestration services, you can find and use the right gateways. This will ensure a safe and seamless checkout experience for shoppers.

2. Fingerprinting

This is another advanced technique that facilitates secure payment processing with orchestration. Also known as device fingerprinting, the process allocates an identifier to the device a user utilizes to surf an application or website. This is done based on attributes like IP address, timestamp, installed plugins, HTTP request headers, and so on. After fingerprint assigning and storing of the identifier, you can monitor a user’s online activity and behavior, just like with cookies. You can also identify a payment method and assign it a fingerprint to prevent frauds.

3. 3DS 2.0 Authentication

This is yet another mechanism that ensures fraud prevention through payment orchestration. 3D Secure is a widely-used security protocol that authenticates an online customer’s identity when they use a card to make the payment. A one-time code or password is sent to the shopper’s registered mobile number to verify the card information before the transaction can go through. However, the 3DS 1.0 version had shortcomings like poor user experience, difficulty in managing multiple passwords for different accounts, and low success rate.

Hence, the 3DS 2.0 version was launched, which makes the customer experience more streamlined and frictionless. It is powered by one-time passcodes, biometric recognition, and mobile authentication methods. Plus, it captures user and device location, your transaction history, and other details, so that issuer banks can approve or decline a transaction with better accuracy. 3DS 2.0 also makes the issuer bank responsible for chargebacks, which means you can minimize overall costs and boost profitability.

Also Read: What is Payment Orchestration, and Why is It Essential for Any Business?

Choose the Right Payment Orchestration Platform and Stay Vigilant

It is essential to avail payment orchestration services from the right provider if you want a smart fraud prevention strategy in place. So, research well and compare multiple providers, their services, charges, and reviews, before taking a decision. Ensure the platform you pick complies with the latest industry standards in payment security and ask if they can evolve fast and devise customized strategies when you scale or venture into new markets. Also go for a platform that generates insightful reports automatically, so you can track customer data and transactions periodically. This will help you identify security lapses or unusual activities on time and address the same.