News Column

Shielding smaller companies from fraud

August 5, 2014

INDUSTRY VIEW Fraud cases can often have a far bigger impact on a smaller business than a large one. When selling online, small businesses can use automated fraud detection tools as part of their e-commerce solution, to emulate the protection that bigger companies have and free up valuable time to focus on growing their business.

The UK is Europe's largest online shopping economy and there is plenty of opportunity for small businesses to grow online - in 2013 91billion was spent online, up 16 per cent from the previous year. However, card fraud also rose 16 per cent to 450million from 388million the previous year, with the majority of card fraud found in the e-commerce space, rather than face-to-face transactions. The most common threats are ID theft and friendly fraud, which is where a customer claims fraud on a legitimate purchase they've made, and many small businesses rely on time-consuming manual order checks to make sure the person buying the goods is legitimate.

Small companies looking to accept card payments from their website should look for an e-commerce payment solution that has automated detection in place, to free up their time to run their business rather than having to manually review hundreds or thousands of transactions which, in the main, will be fine. About half of large companies have pretty much eliminated manual transaction checks because they have automated tools in place to identify and stop fraud in its tracks.

Having an automated detection device in place gives small companies the same advantages as their bigger rivals. Lloyds Bank will be launching Lloyds Bank Cardnet Online Payments in the next few months, which contains a tool (Risk Shield) that detects and stops payments when suspicious behaviour is detected, based on key features of the transaction and wider insight on fraud trends.

Richard Armstrong, head of products at Lloyds Bank Commercial Cards & Acquiring Solutions, says: "There are key factors merchants should look for when assessing risk tools. For example, it is important that the fraud prevention tools are able to see what the most prevalent sources of fraud are in transaction types and then learn how to become better at stopping them. In addition, if merchants are aware of particular postcodes in the UK or in a particular country that they have had problems with, they can configure their fraud rules to block a potential transaction coming from those areas."

Having automated detection in place reduces the risk of fraud and provides small companies with the same level of protection as the big players, and, most crucially, it frees up valuable time to focus on growing their business.

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Source: City A.M. (UK)

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