Risk of fraud for online e-commerce merchants

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Risk of fraud for online ecommerce merchants has skyrocketed with estimates for fraud ranging from $100 -$200 Billion!

The biggest reason for this is a simple numbers game. More people are buying and selling stuff online than ever before. We are buying and selling from across the global and lastly it has become so easy to setup an online business which means makes it also easy for the rotten apples out there.

The negative of this has been felt by both payment gateways and ecommerce merchants. Merchants obviously suffer real losses in lost good and cash. Payment gateways face huge compliance costs and potentially have to pay out of their pockets for fraud. This has lead to increase in costs for ecommerce merchant for credit card processing fees and obviously a hit on their profit margins.

How is the industry reacting?

Luckily we are seeing a huge investment from both startups and established players like Paypal to combat this.

Some of hte most innovative players in this space are:

  • Fraugster. Fraugster is building a system based on AI and machine learning to not only stop fraud in real time but also differentiate the good and bad consumers in real time.
  • PredicSis. Another company using Machine learning to analyse consumer behaviour.
  • Ravelin. Is a fraud prevention tool for marketplaces. It provides fraud detection scores to both the marketplace and the merchant.

External article on Formin.org

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