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A secure payment process is crucial in the fight against bot fraud
Cybersecurity delivers brand security, writes BlueSnap CEO Ralph Dangelmaier.
There is one lingering element among the sea of sales heading into the new year that could stick around well into 2023: fraudulent bots.
As online shopping continues to grow in popularity, so does the risk of fraud and cyber-attacks. The presence of these bots on retailer websites can threaten the completion of successful, authentic purchases in the buying journey for consumers. For brands themselves, they can lead to increased security risks, poor site performance and incomplete purchase headaches. With more sensitive personal and financial information being shared online, retailers need to ensure that their customer data is protected at all times, which means security in ecommerce payments is more important than ever this year.
In today's digital landscape, constant technological advancements and the significant increase in online activity due to COVID-19 contribute to the rise in cybercrimes and bot threats. The sophistication of cybercriminals and the rise of advanced attacks against protocols like Payment Card Industry Data Security Standard (PCI DSS) compliance have made it imperative for retailers to implement robust security measures in their ecommerce operations. For example, specific bot-powered fraud threats include these disruptive schemes:
- Account takeover: This type of fraud occurs when a bot takes control of the user account, and the activity results in unauthorized transactions and theft of users’ personal information.
- Ad fraud: Bots are used to artificially inflate website traffic or click on online ads, which results in wasted ad spend.
- Carding: A form of card fraud where attackers make many attempts to authorize stolen card credentials.
The root solution to this problem is to protect customer information. So retailers must ensure that their online payment processes are secure and that payment systems are protected against bot activity and other forms of cyber-attacks. As a result, implementing security measures that can quickly detect and prevent fraud has become a top priority.
How to optimize against bot-based fraud
Protecting one’s company from bots and fraud doesn’t have to be a complicated process. In fact, it’s par for the course in today’s tug-of-war between bad actors and cybersecurity systems. It’s important to understand that any business can become a target of a bot attack, but it isn’t a foregone conclusion that bot activity will cripple that company’s ecommerce operations. It is crucial to first be aware of the risks and establish an actionable method to protect themselves.
Implement continuous monitoring for suspicious activity.
Businesses should continuously monitor transactions and suspicious activities while having an incident response plan in place to quickly detect and respond to bot fraud. Implementing fraud detection software programs can analyze customer behavior and transactions in real-time to identify and flag such suspicious activity.
Behavioral analysis is used to track and analyze customer behavior over time, which allows payment orchestration platforms to identify long-term patterns of fraud. This can include tracking customer browsing and purchase history, as well as analyzing repeated customer interactions with a retailer's website. This ultimately helps to quickly identify and prevent fraudulent purchases or account creations.
Prioritize anti-bot technology.
Implementing CAPTCHA, multi-factor authentication, or challenge-response systems to detect and block bots from accessing websites or applications are table stakes at this point. But it should be said that these basic preventative measures can help stop automated scripts from creating fake accounts or gaining access to login credentials to make fraudulent purchases. Simply put: they get the job done.
Additionally, businesses can also use IP blocking and user-agent blocking to cut off known bot IP addresses. Tokenization is another anti-fraud method, in which payment providers tokenize sensitive data such as credit card numbers and replace them with a non-sensitive equivalent called a token. The token is a randomly generated string of characters that has no intrinsic value and is used to reference the original sensitive data. The sensitive data is then stored in a secure, off-site location, separate from the token so data isn’t stolen or compromised during a data breach.
Rely on payment platforms for easier detection.
Payment platform partners usually have robust fraud detection and prevention systems in place and can help businesses use their technology and data to help identify unauthorized transactions. Payment technology itself can be used to assess the risk of a transaction by analyzing data such as a given IP address and device data to then be used to identify potential fraud, including bot activity. By analyzing large amounts of data, these algorithms can quickly identify and flag suspicious activity, such as multiple purchases from the same IP address or abnormal spending patterns.
Implementing 3DS authentication through payment providers also increases the level of security and helps to prevent account takeovers by bots. 3DS authentication works by redirecting customers to their card issuer's website during the checkout process, where they are prompted to enter a one-time code or use biometric authentication to verify their identity. This helps to ensure that the individual making the purchase is the actual cardholder and not a bot using a stolen or compromised card.
The benefits of implementing a secure payment process
We’ve gone through the how, but an equally important component of the equation is the why. Being secure sounds good, but what will a secure payment gateway — which allows retailers to accept credit card and other electronic payments securely and seamlessly — do for a retailer, site visitors, and eventual customers?
Simply put, a secure payment gateway provides encryption and security protocols to protect sensitive customer information, such as credit card numbers, during online transactions. This ensures that customer information is transmitted securely and is not vulnerable to the severe hacking or data breaches mentioned above. Most importantly, this helps to build trust with customers, so they can be confident that their personal and financial information is protected.
Furthermore, a secure payment gateway also allows retailers to accept a wide range of payment options, including credit cards, debit cards, e-checks, and more, which can increase the chances of customers completing a purchase. A streamlined checkout process is probably the most fundamental yet important component when it comes to customer retention. It seems simple to say, but making it easy to check out and increasing the chances of customers completing their purchases reinforces brand security in the customer’s mind, on top of increasing sales for the retailer.
From an internal perspective, a secure payment gateway can also provide retailers with valuable data and analytics. This can include information on customer demographics, purchase history, and more, which can be used to improve the customer experience and optimize marketing and sales strategies.
Security in ecommerce payments is crucial in 2023, as online shopping continues to grow in popularity, as does the risk of bot-related fraud and cyber-attacks. Retailers need to protect customers' sensitive information and their reputation by ensuring secure online payment processes and implementing robust security measures to detect and prevent fraud.
Ralph Dangelmaier is the CEO of BlueSnap, an online payments technology company.
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This Week in Commerce: Nike earnings, Fed rate decision
Check out the agenda for March 20-24.
Welcome to a new week. Earnings offer a bellwether for the consumer economy this week, as key brands like Nike and General Mills will report results. Elsewhere, all eyes will be on the Federal Reserve as it announces its latest decision on interest rates.
Fed interest rate decision: The Federal Reserve Open Markets Committee announces its decision on whether and by how much to hike benchmark interest rates following its two-day meeting. The Fed has been hiking interest rates rapidly in an effort to bring down 40-year-high inflation, but slowed the pace at the February meeting with a 0.25% increase. (March 22, 2 p.m.)
Durable goods orders: The U.S. Commerce Department releases data on orders from manufacturers for goods that are designed to last more than three years. This is considered an indicator of business activity. In January, orders dropped at the steepest rate since April 2020. (March 24, 8:30 a.m.)
Monday, March 20: Boxed, Foot Locker
Tuesday, March 21: Nike, GameStop
Wednesday, March 22: Petco, Chewy
Thursday, March 23: General Mills, Express