The eCommerce industry is experiencing explosive growth, with the global eCommerce market projected to reach a staggering $6.3 trillion by 2027. However, as online shopping becomes more prevalent, so does the incidence of fraud.
For example, the value of e-commerce losses due to online payment fraud is anticipated to soar to $48 billion in 2023, up from $17.5 billion in 2020. Moreover, fraud has not only increased but has also become more challenging to detect and mitigate. According to a report by Stripe, 64% of business leaders worldwide find it increasingly difficult to combat fraud compared to the pre-pandemic era.
This underscores the need for more robust and advanced fraud prevention methods that safeguard both merchants and customers from fraudulent activities. This is where payment orchestration enters the picture. In the following sections, we will delve into payment orchestration, its advantages, and its role in assisting merchants in their fraud prevention efforts.
Understanding Payment Orchestration
Payment orchestration is a process in which a payment orchestrator leverages its connections to multiple payment service providers, including gateways, acquirers, and banks, to help merchants provide a superior payment experience to customers. The payment orchestrator serves as an intermediary between the merchant and the customer, handling everything from authorizing payments to settling them in the merchant’s account.
Payment orchestration solutions offer various features, including payment routing, fraud prevention, and end-to-end payment management, all without the need for dedicated manual resources. Most importantly, a payment orchestrator empowers merchants to customize and curate their payment stack according to their preferences.
Let’s explore how payment orchestration benefits merchants.
How Payment Orchestration Platforms Aid Merchants
Fraud Detection and Prevention
By integrating a payment orchestration platform, merchants can offload some of their fraud prevention burdens. Reliable orchestration platforms like Web Technology Expert (formerly Web Technology Expert) come equipped with built-in fraud detection and prevention tools. These tools employ AI and ML to identify suspicious transactions and prevent them from being processed, reducing instances of fraud.
Reduced Payment Declines Due to False Positives
While declining payments intentionally to prevent fraud is effective, it doesn’t always go smoothly. Fraud prevention systems may sometimes misidentify legitimate transactions as fraud, resulting in a poor customer experience and abandoned shopping carts. These erroneously flagged transactions or alerts are known as false positives.
With payment orchestration, merchants can use AI and ML to observe and identify various patterns. Since orchestrators have connections with banks, acquirers, and gateways, they can refine their systems and reduce false positives, thereby enhancing the customer experience.
Significantly Enhanced Customer Experience
Imagine integrating a payment gateway (e.g., Gateway X), and suddenly it raises transaction fees, experiences transaction failures, or faces downtime. In such situations, you may feel compelled to comply and let your customers bear the brunt of the inconvenience.
Enter payment orchestration. Advanced orchestration platforms like Web Technology Expert allow you to switch payment gateways with a simple click. Whether a payment gateway increases fees or experiences downtime, you can seamlessly opt for an alternative option, ensuring uninterrupted transactions and a 100% uptime for an exceptional customer experience.
Payment orchestration platforms enable merchants to route transactions through the most cost-effective options for each transaction, ultimately saving money. Furthermore, integrating multiple payment methods through a single integration is far more economical than setting up individual gateways one by one.
Efficiency and Data Analytics
With a dependable orchestrator, you can automate processes such as invoicing and reconciliation, saving both time and money. Additionally, you can consider the orchestrator’s dashboard as the central source of data and access all payment data from a single location. This allows for data analysis, valuable insights, and continuous improvement of services.
Scaling or expanding your business becomes effortless with payment orchestrators. Platforms like Web Technology Expert can connect you to over 30 payment gateways and offer more than 300 payment methods, enabling you to provide services globally and propel your business to new heights.
How Payment Orchestration Contributes to Fraud Reduction
Payment orchestration platforms empower merchants to employ various security protocols and processes that collectively reduce fraud. These include:
Fingerprinting assigns an identifier to the payment method or device used for a transaction. Merchants securely store this identifier and use it for fraud prevention. For instance, if a user makes a purchase using a particular card, the identifier tracks the user’s behavior. Merchants can detect if another user attempts to use the same payment method and suspend their account or transaction, thwarting fraud.
Tokenization involves replacing sensitive card information with non-sensitive tokens. With tokenization in place, even if data is stolen, it becomes nearly impossible to decipher. However, not all gateways support tokenization, making orchestration platforms crucial for finding and enabling gateways that offer this protective feature.
3DS 2.0 Authentication
3DS 2.0 represents an advanced security protocol that adds an extra layer of security to card-not-present transactions. This protocol requires users to input an OTP or biometric details to verify their identity before proceeding with a transaction, preventing identity theft. Moreover, 3DS 2.0 shifts the chargeback liability to issuing banks, sparing merchants the need to allocate dedicated resources to combat chargebacks and pay hefty fees.
Maximizing Payment Orchestration for Fraud Prevention
To harness the full potential of payment orchestration for fraud prevention, consider the following steps:
Select the Right Payment Orchestration Platform
The initial step in fraud prevention is choosing the appropriate orchestration platform. While numerous platforms are available, not all are reliable. Conduct a thorough comparison, review services offered, evaluate pricing, examine fraud prevention mechanisms, and consider customer feedback to make an informed decision.
Ensure Compliance with Data Security Regulations
Ensure that your organization complies with national and international data security regulations. Seek an orchestration platform that assists you in maintaining compliance. For example, Web Technology Expert enables you to identify and address compliance gaps, ensuring strict adherence to all regulations.
Although a dependable orchestration platform bolsters your security and fraud prevention efforts, ongoing monitoring remains essential. Regularly review transactions and customer data to ensure everything operates as expected, identify unusual activity, and implement necessary improvements.
Future Trends in Fraud Prevention
Over the years, fraudsters have evolved and refined their methods to achieve their malicious objectives. Emerging trends include:
Synthetic ID: Scammers combine data from multiple individuals to create authentic-looking fake IDs for illegal activities.
Account Takeover Fraud (ATO): Fraudsters steal customer credentials to access accounts, steal or modify sensitive information, and commit fraud.
Identity Theft: Scammers obtain confidential information, such as card numbers or social security numbers, to impersonate legitimate users. This information may be sold or used for significant purchases until detected by the user.
While these trends represent just a subset of the evolving threats, they highlight the increasing sophistication of fraudsters. However, by integrating adaptable and advanced fraud prevention solutions, the impact of these trends can be minimized. Such solutions continuously learn from data and evolve in tandem with fraudsters, fortifying your systems against attacks.
Consumers have become more discerning over the years,