Transaction fraud is on the rise as digital commerce continues to grow. In 2023, e-commerce losses to online payment fraud were estimated to reach $48 billion globally — up from $41 billion in 2022 and just $20 billion in 2021.1 Different types of payments fraud, such as credit card fraud and chargeback fraud, can pose serious harm to an organization’s finances and reputation.
Businesses face a significant challenge: They must find ways to improve their fraud detection practices and optimize revenue without interrupting the consumer experience.
Fraud solutions can automatically analyze transactions to spot anomalies, and for enterprises, it pays to work with a trusted industry name in fraud protection. PayPal Braintree can provide the experience and advanced tools that today’s businesses need to keep their transactions secure amid rising fraud.
Below, we’ll cover how to implement new transaction fraud prevention strategies and optimize revenue, and how PayPal Braintree’s fraud solutions can help.
Businesses have been relying on legacy fraud prevention methods and tools for decades. Many may still be using transaction rules and lists to identify suspicious payments, or even manually monitoring and flagging payments for risk of fraud. While these remain important strategies, fraud is evolving, and fraud prevention must evolve with it.
To help your business adapt to the changing landscape and update its transaction fraud prevention strategies, consider these best practices:
It’s difficult to strike the right balance between creating a secure payment process and preventing failed legitimate transactions or false declines. After all, the more ironclad your screening process is, the more you risk blocking authentic payments and frustrating customers. Businesses need to find innovative ways to bolster their fraud prevention strategies while still streamlining their customer experiences to optimize revenue.
According to the true cost of online fraud, a recent study conducted by the Ponemon Institute and sponsored by PayPal, only about half of businesses surveyed said their organizations were highly effective at reducing online fraud when accepting payments at checkout. Only 47% said they were highly effective at investigating fraud.2
Legacy tools struggle to detect and prevent fraud in an evolving payments landscape, and they can also be costly and inefficient. When businesses rely on outdated methods, it can take weeks to resolve issues, bogging down the customer experience and slowing operational processes.
Today’s customers demand a frictionless and secure experience. Companies unable to deliver both will struggle to generate revenue and sustain customer loyalty.
Before building new transaction fraud detection strategies, businesses need to understand how fraud is evolving and becoming more advanced.
Fraudsters are becoming more sophisticated, and businesses and customers are paying for it. Transaction fraud prevention strategies must now account for common and growing types of fraud — including friendly fraud. Also known as chargeback fraud, friendly fraud occurs when a customer completes a legitimate transaction and then falsely disputes it to get their money back.
Payments fraud detection has evolved to help businesses better prevent this type of fraud and mitigate risk. Today’s businesses might consider using advanced fraud prevention strategies such as:
Businesses no longer need to react to risk the way a traditional rules-based system would. Instead, they can use machine learning to detect and predict fraudulent transactions in real time — and help prevent them from occurring in the first place.
This type of payments fraud detection involves:
Instead of hiring more staff to investigate transaction fraud reactively, merchants should look into technologies that mitigate risk — so they can stay one step ahead of their adversaries. This is where management solutions built on machine learning can help improve fraud and authorization rates, in combination with human supervision and a balanced rules strategy.
Intelligent risk algorithms can be applied to large datasets with multiple variables, enabling organizations to rapidly discover correlations that human eyes are more likely to miss. By leveraging machine learning to optimize fraud filters, these systems are also able to continuously adapt along with fraudsters.
The PayPal Braintree payments platform delivers user-friendly machine learning capabilities that are trained on a huge dataset. That data comes from a consumer-merchant network comprising tens of millions of active consumer and merchant accounts globally — delivering insights from both sides of the transaction.3
These advanced fraud protection technologies help e-commerce businesses strike the delicate balance between minimizing instances of fraud at checkout and reducing declines of legitimate customers — known as false declines. In turn, this can improve operational efficiency, helping businesses save resources and reduce the time needed to manage fraud.
PayPal’s AI-powered fraud prevention tools can help businesses minimize instances of transaction fraud and optimize the sales experience for customers. Below, we list some of the biggest benefits of working with PayPal Braintree.
Optimize authorization rates from trusted customers so you can get paid — and maximize revenue. WeSki, an online platform for booking ski trips, achieved a 5.4% increase in authorization rates after integrating PayPal Braintree.4
PayPal’s Fraud Protection Advanced offers dispute and chargeback automation to help businesses minimize chargebacks and prevent losses from friendly fraud. With this solution, Avelo Airlines was able to reduce its chargeback ratio by 15.5% and increase its approval rate by 3%.5
Learn more about how to minimize transaction fraud with chargeback solutions.
A comprehensive, integrated payments platform like PayPal Braintree can help improve operational efficiency in the payment ecosystem and streamline the checkout process.
Let's talk about how PayPal can power your growth.
Tell us a little about your business so we can connect you with the right people
Want to speak with an account specialist right away?
Call 1-855-787-1009Need help with your existing account?
Visit our Help CenterWe use cookies to improve your experience on our site. May we use marketing cookies to show you personalized ads? Manage all cookies