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  • 07 Dec 2023

  • 08:30 AM GMT

How Can Payment Orchestration Help Merchants with Fraud Prevention?

How Can Payment Orchestration Help Merchants with Fraud Prevention?

The eCommerce industry is growing by leaps and bounds. No wonder the global e-commerce market is expected to reach a market volume of a whopping $6.3 trillion by 2027. But as the eCommerce industry grows and more people shop online, frauds are on the rise too.

For instance, the value of e-commerce losses because of online payment fraud is expected to reach $48 billion in 2023 from $17.5 billion in 2020. And not only has fraud increased, but it has also become harder to detect and mitigate. 

Even a report by Stripe states that 64% of business leaders globally find it hard to fight fraud compared to the pre-pandemic era. 

This calls for better and more advanced fraud prevention methods that protect merchants and customers from fraud. That's when payment orchestration comes in. Below, we'll discuss payment orchestration, its benefits, and how it helps merchants with fraud prevention.

Unfolding Payment Orchestration

Payment orchestration is the process wherein a payment orchestrator leverages its connections to multiple payment service providers, such as gateways, acquirers, and banks, to help merchants offer a better payment experience to customers.

The payment orchestrator acts as the middleman between the merchant and the customer, taking care of everything from authorizing the payments to settling them in the merchant's account. 

Payment orchestration solutions bring several features, including payment routing, fraud prevention, and end-to-end payment management, without needing dedicated manual resources. And most importantly, a payment orchestrator allows the merchant to customize and curate their payment stack based on what they find okay. 

Let's now understand how payment orchestration benefits merchants.

How Do Payment Orchestration Platforms Help Merchants?

How Do Payment Orchestration Platforms Help Merchants?

1. Fraud Detection and Prevention

By integrating a payment orchestration platform, merchants can offload some of their burdens related to fraud prevention. This is because reliable orchestration platforms like inai have built-in fraud detection and prevention tools. Such tools use AI and ML to detect suspicious transactions and stop them from getting processed, reducing instances of fraud.

2. Reduction in Payment Declines Due to False Positives

While intentionally declining payments to prevent fraud is an effective method, it doesn't always go as planned. For instance, fraud prevention systems sometimes identify genuine transactions as fraud and decline them, leading to poor customer experience and cart abandonments. These wrongly identified transactions or alerts are false positives.

However, with payment orchestration, merchants can use AI and ML to observe and identify different patterns. And as orchestrators have links with banks, acquirers, and gateways, they can train their systems better and thus reduce false positives, improving customer experience.

3. Substantially Improve Customer Experience

Imagine you have integrated a payment gateway: X. Now, let's suppose the payment gateway hikes its transaction charges, fails to process a transaction, or is just facing downtime. In any case, you'll have no option but to comply and let your customers suffer.

Enter payment orchestration. Smart orchestration platforms such as inai allow you to switch payment gateways with the flick of a button. So, whether a payment gateway hikes its fees or is down, you can opt for the next best option and process transactions without hiccups. This way, you can ensure a 100% uptime and best customer experience.

4. Cost Savings

Payment orchestration platforms allow you to switch payment gateways for every transaction based on different factors, including transaction cost. You can route the transactions through the most affordable options and save money.

In addition, you can integrate multiple payments with a single integration. And this is way more affordable than setting up individual gateways one by one. 

5. Efficiency and Data Analytics

With a reliable orchestrator, you can automate processes such as invoicing and reconciliation, saving you both time and money. Also, you can consider the orchestrator's dashboard as the single true source of data and access all the payment data from the dashboard. This way, you can analyze data, draw valuable insights, and better your offerings.

6. Enhanced Scalability

Scaling or expansion becomes a breeze with payment orchestrators. Orchestration platforms like inai can connect you to 30+ payment gateways and offer 300+ payment methods, enabling you to deliver services globally. This way, you can scale as you like and take your business to new heights.

Now payment orchestration helps increase security and prevent fraud. But how exactly? Let's find out below.

How does Payment Orchestration help Reduce fraud?
How does Payment Orchestration help Reduce fraud?

Payment orchestration platforms enable merchants to leverage different security protocols or processes that come together to reduce fraud, such as:

1. Fingerprinting

Fingerprinting is the process wherein an identifier is assigned to the payment method or device used for making a payment. The merchants securely store this identifier or fingerprint and use it for fraud prevention. How?

Let's say a user visits a gaming website and purchases using their card. An identifier will be attached with fingerprinting, which the merchant can use to track the user's behavior. Merchants can determine if another user uses the same payment method and suspend their account/transaction, preventing fraud.

2. Tokenization

Tokenization is a process of replacing sensitive card information with non-sensitive tokens. With tokenization in place, even if the data is stolen, it's almost impossible to decipher. Sadly, not every gateway support tokenization. That's when orchestration comes in.

By integrating orchestration platforms, you can find and enable gateways that support tokenization and protect your system and customers from fraud.

3. 3DS 2.0 Authentication

3DS 2.0 is an advanced security protocol that adds an additional layer of security in card-not-present transactions. This protocol asks users to enter an OTP or biometric details to confirm their identity before proceeding with a transaction., preventing identity thefts.

In addition, 3DS 2.0 shifts the chargeback liability to issuing banks. This way, merchants don't have to deploy dedicated resources to fight chargebacks and pay a hefty fee.

Good Read: Everything You Need to Know About 3DS Protocol and Its Latest Update

How to Make the Most of Payment Orchestration for Fraud Prevention?

Here's how:

1. Choose the Right Payment Orchestration Platform for Fraud Prevention

The first step toward fraud prevention should be choosing the right orchestration platform. 

While there are numerous orchestration platforms out there, not all are reliable. You can compare a few options, check out reviews, services offered, pricing, fraud prevention mechanisms in place, and other factors to decide which one works the best.

2. Ensuring Compliance with Data Security and Privacy Regulations

Ensure our organization complies with national and international data security and privacy regulations. In addition, look for an orchestration platform that helps you stay compliant. For instance, inai enables you to identify and mitigate any compliance gaps and ensure your origination follows all regulations to the T.

3. Continuous Monitoring

While having a reliable orchestration platform strengthens your security and prevents payment fraud, there's still some effort required on your end. For instance, you need to continuously monitor the transactions and customer data from time to time. This will help you determine if everything is working as expected, spot any unusual activity, and make the necessary improvements.

Future Trends

Over the years, scamsters have evolved and upgraded their methods to fulfill their malicious intentions. Common methods or trends include:

  • Synthetic ID: The scam artists combine the data of multiple users to generate a genuine-looking fake ID for committing a crime.

  • Account Takeover Fraud (ATO): Here, customers' credentials are stolen to access their accounts and steal and modify sensitive information. 

  • Identity Theft: Here, the fraudsters obtain confidential information such as card numbers or social security numbers and act like genuine users. This information is sold or used to make hefty purchases until the user realizes it.

The above is a non-exhaustive list of threats/trends, as new trends appear each year. However, it's good enough to demonstrate how dangerous seamsters are becoming. 

Fortunately, you can minimize the impact of such trends if you integrate better and more adaptive fraud prevention solutions. Such solutions learn based on the data they're fed and evolve as the scammers do, keeping your systems resilient.

Wrapping Up

Customers have become more intelligent over the years, respect data privacy, and expect the same from companies. A survey states 92% of consumers expect companies/businesses to be proactive about data protection. Moreover, according to Tableau, 48% of customers have stopped purchasing from a business over security concerns.

Therefore, it's monumental for merchants to fortify their businesses and payment systems to offer a secure, safer, and seamless buying experience. And one effective method of achieving that is integrating payment orchestration platforms such as inai.

Such platforms not only strengthen your payment stack and prevent fraud but also streamline your entire payments ecosystem, enabling you to offer a better customer experience. So, wait no more and integrate an orchestration platform now!

Expand globally with inai

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