Why Online Fraud Prevention is Crucial for Businesses?
Online fraud has become a nuisance for online consumers with losses ranging to billions of dollars in the US alone in 2018 and more than 1 million more consumers reporting that they become a victim of identity theft. But the actual threat by these online frauds and scams are the businesses using online channels as the cash back requests and regulatory compliances require these companies to adopt strict measures to thwart attempts of payment scams, identity theft, and online account takeover practices.
How much business is on the stake?
Just to give an idea that how many online businesses stand to lose because of the mere threat of online fraud, here are figures from a survey carried out for all individuals that do not own a bank account. 28% of respondents said that they do not trust banks and the other 28% said that they have privacy concerns which mean that only banks are losing more than half of their potential customers because they believe that multinational banks with their large coffers are not doing enough to protect their personal or financial information.
Most of the scams originating on the cyberspace are related to identity fraud or payment scams. The authentic personal or financial information used to commit this kind of online frauds actually originate from large scale data breaches that are reported every now and then where personal data of millions of customers are lost. One of the common reason for these data breaches is the lax security measures adopted by large corporations and the inability to perform identity verification for consumers that are availing services from these digital channels.
Mobile Transactions – The Big White whale
If one puts an eye on the volume of mobile transactions being performed through multiple mobile apps, one will be able to understand why businesses – and not the individual users – stand to lose more in the absence of online fraud prevention tools. 71% of bank customers use online banking while 43% of banking customers prefer mobile banking. In just the past 5 years, the mobile payments volume has grown from USD 11 Billion to USD 17 trillion.
Mobile banking apps are the 3rd most used category of apps, just behind social media apps and whether update apps. 91% of banking customers prefer mobile apps over visiting physical branches.
As you can see, the figures of adoption point towards a healthy trend by consumers to embrace digital channels and the ease of availing services from online businesses using these channels.
The Bubble of Consumer Enthusiasm
For now, consumers are relatively optimistic about the performance of these online payment platforms and gateways. Corporate as well as individual consumers are trusting on these online businesses that with the passage of time, their online operations will be able to weed out these hiccups caused by scammers and fraudsters.
But one must remember there is only enough goodwill to go around for businesses when it comes to customer satisfaction, especially for businesses handling funds on behalf of their customers – banks, Fintechs, and e-commerce ventures in particular – as the competition is already cutthroat and profits are razor thin. The only buoyancy being shown by online businesses, in particular, is by the investment made by angel investors or for the established businesses turning towards the shiny new technology, it is their legacy business models that are supporting their outreach into digital resources.
The current scenario is ideal for online businesses as their targeted audiences are happily using digital channels to avail their services. As it has been established by the above-stated arguments, in order to make this transformation from physical to digital business models, it is important for businesses to adopt a rigorous and zero-tolerance policy against online frauds and scams to make this a genuine source of digital revenues.