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How the threats facing fraud teams have changed in the last year



By Mairtin O’Riada, founder and CIO at Ravelin


Despite more people drifting back to the high street now restrictions are lifting, it’s clear that the digital shift isn’t going anywhere and ecommerce is continuing to boom. Good news for online merchants, many of whom (56% from our recent survey) had already seen a positive effect on their business from Covid-19.

However, with rising digital sales comes an increase in fraud attacks, with fraudsters taking advantage of weaknesses caused by the pandemic and exploring tactics that side-step the latest 3D Secure (3DS) requirements for online payments. A significant one in five global online merchants in the same survey reported that fraud increased in 2021 and that they experienced new types of fraud the business hasn’t seen before.

So, what fraud threats do merchants need to be most wary of in 2022?


Top fraud risks to watch out for

  1. Online payment fraud

Online payment fraud continues to be the biggest threat to merchants, with 20% more businesses noticing an increase over the last year. Fraudsters just can’t seem to stop taking advantage of consumers storing card details and making payments online.

This is the most expensive risk, with global ecommerce losses to online payment fraud hitting $20 billion in 2021, a growth of over 14% YoY.

  1. Policy abuse

The costs of policy abuse can be eye-watering too. Both promotions abuse and refund abuse were rife amid the pandemic. Refund abuse is usually carried out by genuine customers taking advantage of retailer’s return policies, for example, the need for contactless delivery meant it was hard to confirm customer receipt, so many took advantage of this saying they never received items in order to get a refund.

Mairtin O’Riada

Refund abusers have also been known to return low-cost fake goods instead of genuine merchandise, and serial bulk buyers who wear outfits once for a post on Instagram and then return them perhaps don’t realise that less than half of that inventory can be resold at full-price. It’s no wonder that refund abuse rose for 60% of merchants, up from 51% in 2020.

Promotions abuse also saw a jump with 55% of merchants seeing an increase in 2021 from 49% in 2020. While generous marketing schemes can aid in beating the competition and help brands stand-out, more promotions also make for a greater opportunity for customers and fraudsters to take advantage.

It’s therefore no surprise that merchants are starting to recognise that policy abuse is an important threat and consider it as big a risk as friendly fraud.

  1. Friendly fraud

Friendly fraud (also known as first-party fraud) is on the rise for 46% of fraud and payment professionals we surveyed. This occurs when customers falsely claim chargebacks from their bank instead of the merchant, it can happen by customers genuinely misunderstanding that this isn’t the route they should take to get their money back, but less innocent customers also claim they didn’t receive the item or that it was damaged to take advantage of the system.

Refund policy terms and conditions need to be clear to avoid any confusion on processes and unnecessary disputes and refund abuse.

  1. Account takeover

Over half (55%) of merchants have seen an increase in account takeover attacks, with over a third (35%) most worried about revenue loss as a result.

Digital goods merchants were victim to the most attacks with an average of four high-level incidents per month. A huge increase in new online shopping accounts during the pandemic and the fact that digital goods can be easily resold without operational effort like organising delivery are reasons for this.

In addition, the Travel and Hospitality industry were hit hard, with account takeovers increasing to 3.3 a month in 2021 from 2.6 in 2020, with fraudsters going after dormant accounts with valuable loyalty points and frequent flying miles up for grabs.


Achieving a balance between security and happy customers

As the nature of fraud attacks evolve, the techniques and technology required to defeat them is endless, but there are steps online merchants can take.

The Payments Services Directive (PSD2) was introduced in the hopes of stimulating growth and competitiveness in the EU financial sector and addressing the rapid growth of ecommerce fraud. It introduces new standards for making payments secure such as multi-factor authentication to help combat fraud, with the latest version of 3DS enabling strong security and great customer experience to co-exist.

In fact, 90% of merchants we surveyed who are aware of PSD2’s impact believe it will be positive for these reasons. This is great news, as it is possible for merchants to strike a balance between managing risk and optimising conversion with SCA as part of PSD2.

The SCA mandate, now in effect in the UK, means savvy merchants can take advantage of exemptions for some transactions to provide a frictionless customer experience where possible when transaction risk is low. For example, merchants can prevent trusted customers with low fraud rates, regular subscriptions, or low value transactions from going through additional authentication hoops.

But at present only a quarter of fraud and payment professionals we surveyed plan to use each of the exemptions available as part of their PSD2 strategy. And just 36% of UK and Irish online merchants were sending over 40% of their transactions through 3DS in 2021. In 2022, it’s vital that merchants do take the time to segment and analyse all their customer’s payment transactions to understand the potential for exemptions.

The importance of detecting fraud faster

Importantly, however, these extra layers of identity checks don’t remove the need for fraud tools because fraudsters will continue to explore new tactics.

It’s crucial that online businesses invest in fraud tools and teams that manage fraud and payments solutions together, to maximise payment approval rates and frictionless flow from payment providers to prevent customer dropout.

Everything starts with a business’ data. The best approach is to work with a fraud detection and payment acceptance platform provider that can build a custom solution around this bespoke data to gain better control of it. With this centralised platform online merchants can then develop a deeper knowledge of customer behaviours, keep pace with evolving threats, detect fraud signals sooner and reduce the cost of fraud.



Sustainable transformation in the energy sector: econnext AG focuses on scale-ups




  • Scale-ups rather than start-ups: scaling market-ready technologies and companies for a sustainable transformation of the energy and technology sectors
  • Profitable markets for renewable energy as the basis for a successful energy transition
  • econnext AG as Founding Member of Invest.Green – institutionalising and scaling the potential of green investment

Sustainability in every sense of the word, ClimateTech and economic success: these terms describe the investment philosophy of econnext AG. The parent company of several ESG-oriented companies for the development of green technologies focuses on so-called scale-ups. They differentiate themselves from start-ups as their products and services have already reached full market maturity and they are ready for market expansion. A decisive factor in the selection of investments by econnext AG is the potential for synergies among of the scale-ups among each other. This holistic approach enables econnext group to think of innovations in a networked way and thus to decisively advance solutions for climate neutrality.

Given the need to reach climate neutrality by 2045 in Germany and by 2050 in the European Union there is no more time to lose in the energy transition. The significant fossil fuel price spikes and supply disruptions put further pressure on markets. With targeted investments in scale-ups, econnext AG is committed to practical solutions to these challenges. Sabrina Schulz, PhD, board member of econnext emphasises: “We now need a consistent shift away from all fossil fuels. This clears the way for existing renewable and green technologies to be successfully deployed. econnext AG has made it its mission to support young ClimateTech companies in establishing themselves on the market.”

econnext AG is currently invested in seven scale-ups. As an industrial management holding company, econnext focuses on two essential factors: innovative and scalable technologies as well as a positive effect on climate, environment and society in terms of the 17 Sustainable Development Goals (SDGs) of the United Nations. The portfolio ranges from companies in the B2B sector, such as Circular Carbon, which specialises in green heat and biochar, or the energy project developer GRIPS, to B2B4C companies such as Autarq, a provider of solar roof tiles.

Since January 2023, econnext AG is also a Founding Member of Invest.Green, a membership-based network of companies, retail investors, their financial advisors and other key players in the emerging green economy. Dr. Matthew Kiernan, Co-founder and Executive Chairman of Invest.Green: “Our corporate goal is to make green investing accessible to all segments of the population and to channel capital into environmentally sound and financially attractive projects. Partnering with pioneering companies like econnext brings us an important step closer to these goals.”

In addition to a diversified portfolio with a clear, sustainable and market-ready focus, econnext AG relies not least on synergies between its subsidiaries: The subsidiary Ambibox, for example, already produces solar inverters that are used for Autarq’s PV systems, among others. Another subsidiary, LUMENION, can store renewable energy using a special power-to-heat technology and make it available as industrial process heat. The interplay of the various solutions demonstrates the objective of econnext AG: the successful establishment of innovative and scalable technologies with a positive and sustainable effect on climate, environment and society on the market.

“The transformation of the energy sector goes hand in hand with great investment opportunities in Germany and Europe,” says Sabrina Schulz, board member of econnext AG. ” Climate neutrality relies on innovation and new business models – and young tech companies and their solutions are already waiting in the wings to make it happen.”

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Why the future is phygital




By Eric Megret-Dorne, Head of Card Issuance Services and Service Operations at Giesecke + Devrient


Digital banking has become increasingly ingrained in people’s everyday lives. Today, 73% of people globally use online banking at least once a month. Traditional bricks-and-mortar banks, which have long relied on the in-person experience with customers, are now having to step up their offering. With new ways of working blurring the work-home boundary, banks must ensure a fast, seamless connection between face-to-face processes and virtual customer experiences.

However, this does not mean that physical and digital banking are in competition with each other. In fact, many continue to use physical bank cards, with 1.12 billion in circulation in 2021, which provides the basis for digital payments and offerings. As a result, the benefits of digitalisation should converge with the comfort of physical touchpoints to create a holistic, “phygital” experience.

The path to phygital

Banks are accelerating their digital transformation strategies to keep up with the fast pace of fintech innovations. To meet the changing needs and preferences of customers, the payment world is leveraging new technologies to create personalised experiences through a range of different channels.

While the digitalisation of banking has been underway for quite some time – particularly for younger generations – events such as the Covid-19 crisis forced banks and customers of all ages to use digital tools and processes to compensate for branch, office, and call centre closures. With branches worldwide typically operating at reduced capacity due to social distancing requirements, consumers embraced online banking to avoid both the virus and potentially long queues.

However, some consumers still enjoy physical touchpoints, meaning a digital-only approach won’t suit everyone.

Striking a balance

It’s all about options – consumers now want to freely switch between traditional and digital channels without being forced into one. But how can banks achieve this phygital balance? One way is to equip physical channels with digital capabilities, so that online tools can augment the physical experience. For example, personalised bank cards with a bespoke design can be activated digitally, offering customers an extra layer of convenience. Having to wait for a new PIN to arrive in the mail is a common bugbear for consumers, so bringing card activation processes into the digital ecosystem will ensure a more seamless experience.

Greater automation in the card issuance and activation process enables the benefits of digital to be integrated into the physical banking experience without being intrusive. For instance, self-service kiosks empower customers to print their own cards, reducing the time between acquisition and card issuance, while still allowing for in-branch expertise if needed.

The personal touch

Phygital strategies also give banks a range of valuable data insights that can help them better serve their customers. This includes data on purchasing behaviours and habits, which can then be utilised to improve banks’ offerings and unify the physical and digital brand experience. Using omnichannel data helps to build a hyperpersonalisation strategy to provide real-time services.

In this way, digital solutions help banks maximise their user experience. Whenever a consumer interact with a bank, it creates data and behaviours. With fragmented databases, legacy systems and real-time data created by interactions with third-party partners through Application Programming Interfaces (APIs), it is not always easy for banks to streamline this data from different sources. By understanding patterns in that data and behaviours, banks can tailor and personalise unique experiences for each and every user.

Where security meets innovation

With big data opportunities abound, banks should be mindful of their consumers’ security concerns. Customers are now demanding much more transparency when it comes to how information is stored and collected. At the same time, they still desire greater personalisation via digital methods. Therefore, any successful phygital strategy requires a robust digital security to ensure customers have the same peace of mind as when they complete physical transactions.

To close the gap between innovation and security, banks should utilise tokenised infrastructure, which ensures the safe provision of payment credentials and securing of customer payments across all touchpoints. This is particularly important as regulations such as PSD2 and SCA demand strong authentication requirements.

The use of a token greatly enhances the consumer experience. For example, it allows for card details to be automatically updated for subscription services upon the expiry of an existing one, avoiding any service disruption.  Multi-factor authentication can also ensure an additional layer of security, as it combines a password with verifiable human biometrics such as fingerprints or facial recognition.

Best of both worlds

Every consumer has unique preferences when it comes to banking. Therefore, banks must evolve by bringing both physical and virtual touchpoints into a ‘phygital’ world. Only a phygital approach can meet the needs of all end users – whether they favour an in-person experience, an online one, or a blend of the two. The holistic data insights, personalisation opportunities, and optimised security ensured at every touchpoint are also critical in building future-ready banks.

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