Risks involved in Digital Payment in Africa
All payments have a certain level of risk involved. Digital payments, unlike physical payments, have an even higher risk factor. Imagine inputting the wrong value while using your mobile banking app, or experiencing processing errors, system disruptions, loss of trail and even an unanticipated disaster like a fraud.
One of the biggest challenges experienced during B2B payment is Fraud. A lot of the time, these fraudulent practices are committed from outside a business, using checks, stolen credit cards etc. As payment methods evolve, new methods of fraud are also developed. Fraudsters use modern tools to penetrate electronic payment transactions.
What is Payment Fraud?
Payment Fraud is when an individual steals the payment information of another individual to make unauthorized and illegal payment during a transaction. When the legal information owner finds out that an authorised transaction has been carried out on their account, they raise an alarm and this can become an issue for the business as they might have to deal with paying a return fee, settle disputes and lose time and resources. Sometimes, even a fraudulent customer could start a dispute and deny authorisation of payment during a transaction to receive a refund from the business.
Common Types of Digital Payment Fraud
•Identity Theft: This is when a person commits fraud whilst pretending to be someone else. Fraudsters usually just steal or cunningly collect information from unsuspecting individuals instead of just going through the stress of creating new ones. They use this information to make purchases and complete transactions. This is the most common type of fraud.
•Friendly Fraud: This is a type of fraud usually committed by customers. It is when a customer falsely initiates a chargeback on a good or service they have received and denies ever receiving them. This allows them to not only get refunded but also keep the product or enjoy the service.
•Clean Fraud: These types of fraud are the hardest to detect. This is when fraudsters gain access to a company's credible payment information and use them to steal from a business all while avoiding the business' fraud detection system. These are most usually done by an insider (an employee) or hackers.
How Does Fraud Affect a Business
Being involved in fraud can have a lot of negative impacts on a business or an individual. Some of which include;
•Bad Reputation or Image: When a business is involved in a fraud scandal, regardless of whether they did it or not, there is damage to their brand and they are under scrutiny by their customers and members of the general public and potential customers.
•Loss of Customers: A business can lose returning customers if they are involved in a fraud crime. Customers don't want to be associated with businesses connected to fraud for fear of being a victim.
•Financial loss: Sometimes, a business has to refund their customer which is a financial loss in the business's books. Also, a customer can lose money to a fraudulent business and that results in a loss for the customer.
•Law suits: In a situation where the customer takes legal action, the business has to face the law. The business could end up being ordered to close down or eventually lose too much money to continue being in business.
How to Prevent Your business from Fraud.
You can protect your business from being susceptible to fraud. This is made possible through the following ways:
•Monitor business transactions: Ensure that all transactions are being monitored. This helps you keep track of all transactions and reduces the chances of alterations. If possible, have authorized payees. This reduces access to information and allows for accountability.
•Keep records confidential: Do not share records with other people. Avoid card-saving details apps and sites and protect your information from any third party.
•Use strong authentication processes: Ensure that you protect your information with strong authorization processes. Use passwords and multiple-factor verification systems to protect your information. Ensure your passwords are creative and not easy to crack.
•Restrict access to records: Ensure that only a limited number of people have access to sensitive and important records of the company. Restricting access creates space for accountability and reduces the risk of information being leaked.
•Use encryption: You can encrypt your emails and transactions. This guarantees that only the person receiving it can view it. This helps to prevent the falsification of data
•Ensure you keep up with the fraud trends. Be very informed about new strategies that are used to carry out fraudulent activities. This allows you to put safety measures in place and prevent such mishaps from happening to you.