Smarter Digital Payment Monitoring in 2023

In bustling metropolises and rural communities alike, changes in the world of payments are forcing businesses to move at the speed of light. Whether you operate your business from a towering skyscraper or a busy village market, you must deal with dynamic evolutions in digital payments. From instant payments to super apps to embedded finance, businesses are embracing new ways to separate consumers from their money safely. Even buskers, having realized that few commuters carry cash anymore, have switched to QR codes and softPOS devices.

Picture this: The sun has set, casting a golden hue over the city, and you, the CISO of a financial institution, are looking out of your top-floor office window after another successful day. Your smartphone vibrates, and a notification alerts you of a payment network anomaly detected by your AI-driven payment monitoring system. You are not concerned because you have invested in the right software to handle any anomalies on your network. Shortly thereafter, another notification lets you know the issue has been resolved and the threat blocked, thanks to the advanced transaction firewall and anomaly-blocking system you have implemented.

These are no mere fantasies; they exemplify an evolving financial landscape. As the threat landscape evolves, digital payment monitoring and blocking systems must match their progress to ensure they protect your payment networks. Now is the perfect time to take stock of how you monitor your transactions and ensure neither fraud nor cyberattacks slip through the cracks.

The Growth of Smarter Digital Payment Monitoring in 2023

Rapid advancements in technology have significantly transformed the way we conduct transactions. Digital payments have seen their popularity skyrocket due to the convenience and speed they offer, as people globally move towards this method, according to a report conducted by the Bank for International Settlements. Though cash transactions remain relatively steady, digital payments are increasingly becoming the payment method of choice. In response to the need for secure digital transactions, companies look for better digital payment monitoring to better protect their businesses and clients. They want to leverage technology to monitor transactions in real-time, identifying and preventing fraudulent and anomalous activities before they can cause harm.

Increasingly, businesses are realizing this is a business necessity. Businesses that can ensure the security of their customers’ transactions are more likely to retain their trust and loyalty. Furthermore, with regulatory bodies worldwide tightening their requirements for transaction security, cyber defense, and AML prevention, adopting intelligent digital payment monitoring is becoming imperative.

Technologies shaping the future of Digital Payment Experience

Several technologies are reshaping the future of digital payment experience, such as artificial intelligence (AI). AI algorithms allow businesses to analyze vast amounts of transaction data in real-time, identifying patterns and anomalies that may indicate fraudulent activity. This ability to detect potential fraud in real-time is a game-changer, enabling businesses to prevent fraud before it happens.

Machine Learning (ML), a subset of AI, is another component crucial to enhancing digital payment monitoring. ML algorithms learn from past transaction data to predict and prevent future fraud and identify anomalies. By continuously improving their ability to detect fraud and anomalies, these algorithms offer a proactive and effective solution for securing transactions. The most effective payment protection platforms use both supervised and unsupervised machine learning. The former detects known fraud vectors, while the latter can detect new attack ones.

Another key technology is instant payments, with systems such as Mexico’s Interbank Electronic Payment System and Brazil’s Pix. These allow customers to make real-time payments. Over seventy countries have, or will soon implement these real-time payment systems to enable instant transfers between accounts 24/7. Such payments are instant and are irrevocable, making them a prime target for fraudsters. AI-driven solutions that block real-time fraud are more crucial than ever for these real-time rails. While these systems make payments faster, more convenient, and more responsive to the needs of businesses and consumers, they can also leave them more vulnerable to fraud.

Effective Ways of Securing Transactions

There are several effective ways of securing transactions. Using AI- and ML-enabled, real-time transaction monitoring solutions to protect your payment systems gives you an advantage over systems that don’t use them.

Another effective method is the use of multi-factor authentication. This involves verifying the user’s identity through multiple methods, such as biometric data, a password, a one-time PIN (OTP), or a physical token. By requiring more than one form of authentication, this method makes it more difficult for fraudsters to gain unauthorized access to transaction data.

One of the simplest and most effective means is using strong encryption. Encryption converts transaction data into a code that can only be decrypted with a specific key, preventing unauthorized access.

Steps for Smarter Digital Payment Monitoring

1. Optimize Data Acquisition: You need a consolidated view of the entire payment chain to gain control over your data and get maximum insight into the payment performance. Solutions with machine learning capabilities and AI, built for payment environments, can help you perform automated profiling of each payment to identify connectivity issues, bottlenecks, failures, fraud or unexpected declines.

2. Real-time Transaction Monitoring: In 2023, real-time payment monitoring is not a luxury; it’s a necessity. If you don’t have instant access to data for the entire transaction journey, you won’t be able to proactively deal with troubleshooting, cybercrime, or potential payment failures.

3. Prioritize Payment Security: Businesses and organizations whose revenue depends heavily on their online presence and who process digital payments face continual threats from cybercriminals. Recently, we have observed more and more cases of financial crime convergence, where fraud, AML, and cybercrime constitute one serious incident. Robust prevention strategies and the right technologies are the key to improving the protection of your business and customers. Companies need to think like criminals. Since perpetrators are looking for a system’s weak points, businesses should trace the flow of crime to identify vulnerabilities as they develop their defenses. Criminals don’t make a distinction between AML, fraud, or cybercrime. They act based on whatever gaps in the system they can find.

When you enable end-to-end transaction monitoring in real-time, supported by solid payment fraud detection and blocking technology, you can significantly reduce the risks of revenue and reputation losses.

4. Reduce Manual Review: When it comes to assessing digital payments, speed is paramount. With instant (or near-instant) payments, there is no time to review anything manually. Automation is vital for reducing and identifying fraud and anomalies. Effective AI-driven solutions can assess risk scores based on all the field-level data in a transaction and instantly determine the legitimacy of a transaction before the funds transfer. Without this capability, you run the risk of flagging legitimate transactions as fraudulent. These wrongly flagged transactions lead to false positives and frustration for your customers. You also risk false negatives, resulting in fraud. Ideally, your payment fraud solution must be able to independently review real-time transactions and correctly identify and block or rate-limit any anomalous transactions automatically. This avoids interruptions in your customer’s payment journey while protecting you and them from fraudsters. Since instant payments are irrevocable, stopping fraudulent ones is imperative.

The Future of Secure Transactions with INETCO BullzAI

Securing transactions has become more critical as financial crimes become increasingly sophisticated. INETCO BullzAI can help. By leveraging AI and machine learning, BullzAI creates unique behavioral profiles for each user, device, and entity, generating more accurate and precise risk-scoring, while reducing false positives. It can block or rate limit a specific transaction without impacting legitimate ones. BullzAI delivers impeccable transaction security and higher completion rates. BullzAI continuously self-trains by learning from past transaction data. It can also identify previously unknown threats. This proactive approach prevents payment fraud before it happens, ensuring peace of mind for each digital transaction.

Whether you are looking for a new payment fraud solution or to augment what you currently have, contact INETCO to learn more about how we help our customers decrease payment fraud and reduce false positives in all their digital payment channels.