GumBallPay Payment Gateway: Fighting Payment Fraud

The GumBallPay payment gateway provides a payment solution for businesses in the iGaming industry, providing clients with GumBallPay’s extensive expertise and capability to make their goals a reality. This article will explore various types of payment fraud, including fraudulent chargebacks and their impact on businesses.

With a total transaction value predicted to hit $8.5 trillion by the end of 2022, digital payments are big business today. Gone are the days when electronic payments were solely the remit of large corporations, with peer-to-peer (P2P) payment apps like Venmo, Zelle, and Cash App becoming an increasingly common fixture of smartphone home screens. Although some individuals continue to rely on paper checks, chiefly members of older generations for whom eCommerce and smartphone use is less widespread, by and large, digital payments have taken the world by storm.

Just as vast numbers of consumers have embraced digital payments, cadres of fraudsters have also been attracted to the arena, seeking to divert payments or exploit the personal information attached to them. Almost half of all consumers in the US have reported being the target of payment fraud in the past, with cybercriminals deploying an array of different techniques to steal money or data. Consumers expect businesses to shield them from these fraudsters, and organizations are utilizing a diverse range of defenses to deflect these attacks.

Common types of payment fraud include:

  • Check Fraud: This often arises in the form of stolen or altered checks, with bad actors intercepting checks in the mail, changing amounts and cashing them. Other tactics include check washing, where the bad actor steals the check, uses household cleaning products to erase the payee’s name, then adds their own name and cashes the cheque.
  • Account Takeovers: One of the most pervasive threats faced by app users today, account takeovers involve fraudsters seizing control of accounts and draining stored account values or stealing personal data. Criminals use a variety of tactics to gain control of accounts, including brute force botnet attacks and phishing.
  • Identity Fraud: Identity theft/fraud can take a variety of forms, such as an insider threat, where a disaffected employee of a business steals payment details or personal information. Alternatively, identity theft could arise from a fraudster digging through a business’s trash or a data breach.
  • Merchant Identity Fraud: Similar to consumer identity fraud, in merchant identity fraud, criminals set up a spoof merchant account after illegally obtaining a business’s identity data. The fraudster then uses this spoof business to place charges on customer’s credit cards before terminating the account and walking away with the money, leaving the real business to deal with a slew of fraud reports, customer complaints, and chargebacks.

Chargebacks are incredibly damaging to merchants, resulting in loss of the cost of goods in addition to marketing costs, fulfillment costs, and the processing fee, which combined typically amount to around two thirds of the retail price of the item sold.

In addition to chargebacks stemming from merchant identity fraud, another big problem for merchants is legitimate customers dishonestly raising dispute queries with their banks. Take for example an iGaming customer buying top-ups or refilling their account, then later changing their mind and contacting their issuing bank claiming they did not authorize the transaction.

Challenging a chargeback is a painful process for any merchant, but it is possible. However, the merchant needs to weigh up whether it is worth investing the time and resources required to dispute a false chargeback claim, taking into account the transaction amount, the availability of evidence to the merchant, and their likelihood of winning.

Founded in 2019, GumBallPay supports eCommerce sites and high-risk sectors alike, providing a payment gateway solution with a comprehensive fraud protection suite, augmenting security and protecting the businesses it serves from criminal activity.

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