Fraud is one of the most significant–and costly–risk factors facing financial institutions and payments providers today. Fraudulent transactions using payment cards alone are projected to top $36 billion in global volume in 2024, according to the Nilson Report.
As staggering as that figure is, it’s likely actually under-stating the actual cost incurred to providers. A 2024 study from Lexis Nexis found that every dollar of fraud loss results in $3.41 in additional costs related to labor, investigations, legal and other fees and external recovery expenses for U.S. financial services firms. Add in fraud-driven reputational damage that can drive away existing customers and make it harder to win new ones, and it’s clear fraud has the potential to become a very expensive problem.
The Executive’s Guide to Comprehensive Payments Fraud Detection
Given the potential losses involved, providers must invest in defensive fraud detection tools and systems designed to detect and prevent financial and payments fraud. But mitigation itself doesn’t come cheap, so it’s important for your business’s bottom line to ensure anti-fraud spending is done wisely.
To help optimize your firm’s investment in this critical area, here are three key considerations to ensure you’re getting the most bang for your fraud mitigation buck.
1. Establish fraud detection benchmarks
Payment fraud risk varies depending on several variables, including the volume of transactions you’re processing, what channels you’re operating in and what type of industry you’re in. Therefore, establishing meaningful fraud benchmarks for your business requires careful consideration of your company’s risk appetite, the financial products you offer, and more.
How to Fight Payments Fraud while Preserving a Positive UX
The most effective and efficient method of solving that equation is to ensure you have full visibility into how much–and where–fraud attempts are occurring, and how much of it is preventable. From there, you can establish meaningful benchmarks for your organization to work toward, using fraud mitigation KPIs–such as dispute rate or fraud rate/loss per client–to measure how effective your efforts are at reducing specific types of fraud and what, if any, changes should be made.
How Clients Can Mitigate Risk from Fraud with Automated Incoming ACH Screening
2. Leverage ‘smart’ fraud detection technologies
Advances in artificial intelligence (AI) and machine learning technology have driven the creation of powerful new weapons payments and financial services providers can bring to bear in the fight against financial and services and payments fraud. However, these same high-tech fraud detection tools also can be exploited by fraudsters to better achieve their nefarious ends.
In this high-tech, high-stakes arms race, keeping up requires technology that can continually get smarter over time. Such dynamic systems ingest millions of data points to analyze patterns and identify anomalies that could indicate fraud, and subsequently use that information to step up defenses against similar future attempts–providing a highly future-proof solution that continually evolves to stay ahead of the bad guys.
3. Find the right fraud detection partner
No matter how sophisticated an organization’s fraud detection tools, the overall effectiveness of its defenses depends heavily on finding the right fraud specialist partner to offer crucial guidance in developing a sound fraud mitigation strategy, implementing comprehensive mitigation tactics, and providing ongoing support.
When evaluating a potential fraud mitigation partner, here are some of the key capabilities to look for:
Customized solutions that can support your company’s unique transaction and risk profile
Multi-layered solutions that offer comprehensive fraud and risk protection across channels and payment types
Enhanced risk decisioning based on actionable, real-time data for card-based transactions
A holistic, end-to-end offering that addresses both operational and transactional risk
Top-notch customer support and dispute services that leverage both digital tools and human-based support
Want to learn more about fraud detection tools?
Contact us to find out how to get the most out of your fraud mitigation investment.
Adaptive Banking: Galileo’s Guide to Building Scalable Financial Systems Under Pressure
Learn how Latin American companies are shifting from basic payment speed to Adaptive Banking to conquer fraud bottlenecks, compress product lifecycles, and capture real-time market share.
Measuring What Matters with Co-Brand Debit: Frameworks to Track Trips, Nights, and Share-of-Wallet
Move past card activations. A practical framework for travel and hospitality brands to track nights, share-of-wallet, and redemption velocity—and prove a co-brand debit program is working.
How Instant Access Helps Prevent Onboarding Churn for LatAm’s One-Touch Consumers
Learn how SoFi Tech Solutions’s configurable platform, DDA infrastructure, and instant digital debit help banks in Latin America (especially Mexico and Colombia) reduce onboarding churn and secure primary account status.
Debit Processing + Deposits: What to Measure, What to Fix, What to Switch
Learn KPIs for banks to spot deposit + debit stack issues, root causes, and how to solve and modernize with the right fintech partner without replacing the core.
From Payouts to ‘Earnings Experience’: The New Battleground for Gig Workers
Real-time gig payouts are now a competitive lever. Learn how instant payouts reduce churn and costs, and boost revenue; plus key stack capabilities to look for.
