We know the fraud landscape is constantly evolving. High-risk merchants need to be proactive about new threats to protect their revenue and keep their customers’ trust. A recent Finextra blog post outlines the five fraud trends that will be most felt by high-risk merchants in 2025. This smart piece was created by T4A’s Naina Rajgopalan. The article emphasizes the importance of proactive fraud prevention strategies, including near real-time fraud detection, to mitigate the growing risk of chargebacks and other fraudulent activities. Rajgopalan’s analysis provides essential context for any business looking to better understand how to work within the complicated realm of fraud prevention.
Rajgopalan, whose detailed profile and Finextra photo are here, depicts a frighteningly forbidding landscape for merchants. Her blog post, provided by an external author without Finextra editing, highlights the need for advanced fraud detection methods and a comprehensive understanding of evolving consumer behavior. The full article expands on observations from these experts with Finextra Publisher Profiles, including Rolands Selakovs, Carlo R.W. De Meijer, and Paula Hunter. That’s the sign that there is a robust debate over fraud prevention techniques taking place in the Finextra ecosystem.
The Rise of Near Real-Time Fraud Detection
One of the major strategies featured in Rajgopalan’s blog post is establishing near-real-time fraud detection. This method incorporates shared alerts with Ethoca and Verifi. It prevents more fraudulent activities associated with credit and debit card purchases from escalating into expensive chargebacks. By detecting suspicious transactions in near real-time, merchants can intervene and prevent fraudulent orders from being fulfilled, minimizing financial losses and protecting their inventory.
Combining Ethoca and Verifi alerts creates a more holistic, proactive approach to preventing fraud before it happens. This integrated view provides merchants a 360-degree view of their potential fraud risks. With this knowledge in hand, they are better equipped to determine if they should approve or deny a given transaction. Near real-time fraud detection has been a significant innovation in the war on fraud. It arms merchants with a strong weapon in the fight against ever-evolving threats.
This simple, proactive measure prevents a great deal of financial loss. From a customer experience perspective, it protects cardholders from the impact of fraudulent transactions. Merchants have to consider the customer experience—by preventing fraud where possible, merchants can ensure customers’ trust and loyalty, which are critical to long-term success.
The Growing Threat of Friendly Fraud
Rajgopalan’s analysis points to the expected rise in friendly fraud by 2025. Also known as chargeback fraud, friendly fraud occurs when a real cardholder charges back a legitimate transaction. For the most part, they generally assert that they did not approve the purchase. Fraud is becoming a larger issue as consumers become educated on chargeback procedures. Second, consumers are becoming more aware of their rights to routinely receive refunds for buyer’s remorse and bad purchases.
Friendly fraud is increasing, which provides a perfect storm of obstacles for merchants. They frequently find it difficult to distinguish real accidents from fake ones. In 2024, merchants lost a shocking $8.9 billion to chargebacks. Each of those predatory transactions represents a huge financial cost these frauds can inflict. Consumers are becoming more savvy at gaming chargeback systems. To combat friendly fraud, merchants need to ensure they are using robust fraud prevention tactics.
Such measures can include requiring consumers to enter additional forms of identification or authentication when a transaction is initiated. This can be anything from requiring a CVV code to using a one-time password. Merchants can use fraud scoring systems to flag transactions with a higher likelihood of fraud. In addition, keeping close documentation of any sale and customer correspondence can aid merchants in winning fraudulent chargebacks.
Preparing for the Future of Fraud
Rajgopalan’s blog post is an excellent reminder for high-risk merchants to stay one step ahead of the rapidly changing fraud landscape. By understanding the emerging trends and implementing effective fraud prevention strategies, merchants can protect their businesses from financial losses and maintain customer trust. Rajgopalan and other industry experts on Finextra provide valuable insights which you can’t afford to miss. Crucially, these insights inform merchant decision-making in fighting fraud in the ever-evolving world of fraud prevention.
In order to win the battle against fraud, you need to be educated. Be agile enough to adapt as fraud detection trends change and invest in smart fraud detection technologies. Merchants need to constantly reassess their fraud prevention tactics and modify them to adapt to new threats. By taking a proactive approach to fraud prevention, merchants can minimize their risk of financial losses and maintain a competitive edge in the marketplace.
Collaboration and information sharing between merchants, payment processors and fraud prevention professionals is key to stopping fraud in its tracks. To address the issue, industry stakeholders can come together to create and adopt best practices for combating fraud. Together, they will help make the internet a safer place for e-commerce.
