Merchants are losing approximately $20 billion a year due to credit card fraud. Financial institutions have spent billions of dollars to prevent fraud and lower the number of fraudulent activities. The challenge, however, has been the lack of a communication channel, which allows credit card verification in more accurate ways at the store level.
In my opinion, mobile payment platforms will significantly contribute to the reduction of fraudulent transactions. You can now verify a transaction in multiple ways within seconds.
Take our solution for example: We check and analyze each user transaction location, and use mathematical algorithms to flag suspicious transactions based on sales volume, location and spending habits. Bear in mind that we can also send users a notification email with each transaction. These new fraud prevention methods have helped us eliminate some of the challenges physical card providers face.
I am confident that in five to ten years from now, fraudulent transactions will no longer be the problem they are today. Fast food restaurants and coffee shops are currently losing some money for charge backs. Going forward, as mobile payment solutions become more secure and fraud-free, merchants will see a significant reduction in fraudulent activities, resulting in higher profits and returns for them.