A recent Nilson Report indicated that worldwide, more than 22.1 billion payment cards were in circulation. Nilson’s figures excluded eWallets, which many economists predict will be used by 50% of the entire global consumer population within the next five years. The total number of online transactions taking place daily is impossible to estimate, but research suggests that just 20% of consumers are completely confident in the security of online payments.
Understandable, given the growing prevalence in payment fraud and merchant fraud worldwide.
Annual losses due to cybercrime directed at online payments are predicted to surpass $200 billion for the first time in 2024. Basic and datedConventional transaction fraud detection and prevention systems are still in widespread use, and though are fast falling behind an increasingly sophisticated cybercriminal contingency.
For payment fraud detection and prevention systems to succeed, an entirely new and wholly more intelligent approach is called for.
What is the API Economy?
The most widely acknowledged definition of the API economy is “the exposure of an organization’s digital services and assets through application programming interfaces (APIs) in a controlled way.”
Speaking on behalf of Gartner Research, Vice President Kristin R. Moyer elaborated on this definition by describing the API economy as “…an enabler for turning a business or organization into a platform.”
“Platforms multiply value creation because they enable business ecosystems inside and outside of the enterprise to facilitateconsummate matches among different users and enable facilitate the creation and/or exchange of goods, services and social currency so that all participants are able to capture value.”
The scope for APIs to assist with sophisticatednew-generation payment fraud prevention and detection, is demonstrated by the next generation payment fraud detection system of Fraudio.
What Do APIs Do?
At a fundamental level, APIs work by facilitating the movement of data between separate software applications, while maintaining the integrity of the data. More specifically, APIs are a “set of software modules, tools, and protocols that enable two or more platforms, systems and most commonly, applications to communicate with each other and initiate tasks or processes,” as described by Forbes.
The fact that such an extensive array of software packages and applications are in use emphasises the importance and value of this muti-functional, yet secure movement of data.
Why Does the API Economy Matter for Financial Fraud Prevention?
Digitization of accounts has become the new norm for consumers and businesses on a global basis. Fraudsters are becoming increasingly sophisticated and capable with their attacks, subsequently resulting in upwards of 15 billion recorded data breaches each year.
The potential value and importance of Application Programming Interfaces (APIs) lies in their capacity to create complex interconnected ecosystems that enable in-depth identity verification, advanced authentication and the instantaneous/automated execution of intelligent anti-fraud checks.
Rather than relying exclusively, or even primarily, on established in-house policies and protocols, merchants have available to them use cloud-based solutions to perform far more advanced and secure verification checks when processing requests.
The Advent of AI (Artificial Intelligence) and Machine Learning
Fueling the growth and evolution of APIs is the ongoing development of advanced anti-fraud systems based on AI (artificial intelligence) and machine learning.
What makes the difference with AI and machine learning software is the way in which the system is designed to emulate the architecture of the human brain. Rather than operating in accordance with a series of preset protocols and established norms – , issues and irregularities are detected by way of an ongoing ‘learning’ process.
Transaction fraud detection systems like Fraudio are literally able to learn and modify their own actions, with little to no human involvement required. This gives merchants and authorities alike a distinct advantage in the war on payment fraud.
Fraudio works by seamlessly connecting card issuers, payments service providers and merchants with a centralized AI ‘brain’ in the cloud. The ‘knowledge’ and ‘experience’ acquired by the brain over the course of billions of transactions allows for more intelligent and accurate detection of irregularities and potential issues.
As the system in its entirety is housed in the cloud and managed by Fraudio, it’s a deceptively simple API to integrate into existing transaction security systems.
Why payment fraud detection system?
Financial fraud is a problem that spans all industries and sectors, affecting an estimated 80% of all organizations worldwide. On average, merchants lose close to 2% of their revenues to fraud, often spending as much as 23% of their budget on fraud detection and prevention.
Fraudio was designed to deal a hammer-blow to the cybercriminals involved in payment fraud, through the creation of a dynamic modern SaaS solution that moves away from the traditional professional services approach.
Ultimately, Fraudio takes businesses a step closer to the intelligent yet completely automated fraud detection and prevention needed to operate safely, in the face of growing cybersecurity threats.