How to prevent fraud in MPOS?

The Mobile POS or mPOS is a combination of wireless devices connected to the internet, consisting of a payment card reader and a smartphone/tablet that enables merchants to accept payments through a card or mobile wallet. The mPOS can also be a mobile app on the smartphone/tablet through which retailers can do much more than just accepting payments.

The following are a few types of mobile or online fraud that merchants must be aware of:

Identity theft

Identity fraud is when fraudsters capture sensitive data like customer related information and use this identity to make online purchases without payment card. In the case of mobile wallets, fraudsters might physically steal mobile devices and use them to make purchases. 

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Loyalty fraud

This type of fraud can happen when fraudsters intercept loyalty programs or members' accounts for theft and transfer of points. The points can be sold and transferred to others for monetary gain.

Friendly fraud

This kind of fraud is when genuine orders are disputed by the consumer, leading merchants to refund payments. This form of fraud can be unintentional also as the consumer might forget that they placed the order. This can also happen on an intentional level, with fraudsters placing orders and then claiming they never received the products, enjoying both a refund and the purchased goods.

How can Merchants protect themselves against fraud?

Distinguish between e-commerce and m-commerce

It is essential to understand the scope of fraud and effectively allocate resources to avoid different types of fraud. Reviewing fraudulent attempts and successes, and distinguish between the frauds origins, to implement security programs that offer the best coverage.

Implement PCI DSS Level 1 security standards

Merchants have to implement the Payment Card Industry Data Security Standard (PCI DSS) to safeguard against fraud. PCI DSS ensures the acceptance of best practices to protect the sensitive information of payment cards. It is an essential requirement for all merchants who accept credit cards. The level of security depends on the volume of transactions performed, and Level 1 offers the highest protection.

Multi-factor Authentication

Mobile devices are enabled with multi-factor authentication, with biometric authentication, fingerprints, mobile sensor-powered authentication method, and identification questions and PIN codes. By using all the authentication methods, the chances of identity fraud decreases.

Track customer behavior

The variation in customer behavior may indicate account conquest. Retailers should use tools to track the purchasing behavior of particular customers and reach out directly to the customer for verification when purchases exceed their predefined limits.

Mobile retailers that implement seamless and secure payment solutions present their customers with better user experience. The customers are more likely to adopt and increase their mobile commerce activity if they feel safe.  

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