In digital businesses, managing risks is an everyday occurrence: from those that affect reputation to those that impact operations and finances. In the area of payments, exposure is concentrated on three key fronts: credit, fraud, and account takeover.And although eliminating them completely is impossible, we can reduce them with processes, technology and judgment.
Platforms that facilitate payments to third parties coexist with a peculiar risk structure: the platform itself, the merchants or providers that process the payments, and the cardholders who pay all coexist. This “triple layer” creates interdependencies and cross-risks that must be addressed with onboarding strategies, continuous monitoring, and mitigation.supported by security standards, regulatory compliance, and third-party tools.
Risk overview in digital payments
Before going into tactical details, it is necessary to define the concepts. Credit risk arises when refunds or chargebacks need to be covered and the seller's cash reserves are insufficient.Fraud occurs when unauthorized charges are processed (stolen cards, BIN tests, etc.); and account takeover occurs when a scammer takes control of a legitimate seller's account.
Classic example: an event platform liquidates organizers before the show date and the show is cancelled. If the organizer cannot return the money, the platform assumes the loss.This case shows why the transfer schedule and initial risk assessment matter so much.
In addition to the economic vector, there is the technical one: Fraud techniques evolve in tandem with the adoption of eCommerce, contactless payments, and digital walletsTherefore, security is a necessary condition for growth and compliance with regulators and customers.
Credit risk management strategies
The goal is to anticipate negative balances and concentrations of exposure by vendors or verticals. The measures are organized into three areas: onboarding, monitoring, and mitigation..
Onboarding
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Admission assessment: It gathers business information (product/service, returns policy, volume forecast, history on similar platforms) and, for large sellers, applies manual reviews with financial statements and credit inquiries to owners and managers.
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Temporary controls: Set initial daily/monthly volume limits and, if these are exceeded, pause transfers to review activity until you understand the account's trading pattern.
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Reservations: requires guarantees (e.g., through fund reserves) for accounts with a high-risk profile and It gradually releases that reserve when they demonstrate a good track record..
Monitoring
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Dynamic alerts: Monitors disputes, negative balances, claims, and volume changes. Any dispute rate above 0,75% is a warning sign which demands immediate action.
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Periodic reviews: In addition to daily alerts, schedule in-depth reviews to see trends in chargebacks, refunds, concentration by customer/country, and average ticket size.
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Proactive education: shares guides and resources for emergencies (health crises, natural disasters) to to help sellers manage returns and serve their customers.
Mitigation
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Delay transfers: It adjusts the settlement frequency to the risk category. For deferred goods/services, hold funds until delivery to reduce returns and chargebacks.
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Negative balance management: implements automatic debits or recovery plans depending on the jurisdiction for regularize accounts with negative balances and prevent the risk from falling on the platform.
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Concentration limits: defines exposure thresholds by country, vertical or vendor (e.g., a single vendor cannot exceed a certain % of the total risk) and toughens policies if they are exceeded.
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Capture near delivery: approximate payment and supply; authorizes first and capture when the service/product has been provided.
Fraud risk management strategies
A fraudulent payment is one that the cardholder does not authorize. These could be purchases made with stolen cards or "card testing" attacks. to validate numbering. The platform must be covered from buyer fraud and that of fraudulent sellers, with phased measures.
Onboarding
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Identity and legitimacy: Verify the business: social media presence, licenses, functional website (beware of copied text, clunky templates), physical address and inventory or service records.
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Detects duplicates: checks data (IBAN, tax information, name/date of birth) against rejected accounts, identical IP or domain patterns and relationships between accounts.
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Reserves for risk: just like with credit, retain a guarantee to accounts with a higher probability of fraud and release it in stages.
Monitoring
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Define normality: profiles the typical behavior of each seller (monthly volume, dispute rate, average ticket) to detect anomalies by deviation.
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Custom alerts: creates ad hoc rules based on observed patterns in confirmed cases of fraud to get ahead of new attempts.
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Additional tests: If you notice suspicious signs, request invoices, inventory photos, or tracking numbers and pause payments if necessary.
Mitigation
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Conditional liquidation: adjusts payment schedules at risk and delays transfers until stability in chargeback rates is verified.
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Card test: Unusual spikes in rejected payments (402 codes) indicate card testing. Introduce barriers like CAPTCHA or limits per IP/device.
Account takeover
Even with legitimate sellers, an attacker can hijack the account and divert funds. The best defense combines robust verification and monitoring of behavioral signals..
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Identity and security verification: strong password policies, two-step authentication and Access controls well designed.
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Warning signs: volume peaks, increases in average ticket, starting from remote IPs or "new" devices. Suspend transfers if you detect anomalies.
Security, compliance and technical controls
Payment security relies on standards. In the late 90s, Visa launched CISP, and shortly after, the other networks created their own programs. To unify criteria, PCI DSS was created, the global standard that defines controls for those who process, transmit or store card data..
PCI DSS classifies compliance by levels; Level 1 requires an audit by an external evaluator Level 4 allows for self-assessment, based on volume and exposure. Integrating with gateways that encapsulate data helps reduce the attack surface, but does not exempt users from best practices.
Encryption: Protect data in transit with SSL/TLS and configure strong algorithms. Asymmetric cryptography adds layers by separating public and private keys. Update systems and rotate keys it is essential.
Tokenization: PANs are replaced with random tokens. Payments are authorized with internal keys. preventing sensitive data from being traveled or stored unnecessarilyeven in ecosystems with multiple actors.
Authentication: from additional factors to transactional risk analysis. 3D Secure (3DS) analyzes IP, history, and amount; If it detects risk, it requests an extra step (OTP via SMS/email, for example).
SSL/TLS and “padlock”: The HTTPS prefix indicates an encrypted channel, but be careful: Malicious websites can also obtain certificatesSo the lock is not a blank check.
AVS and CVV: Address verification and security code add useful friction. They work better together (AVS can fail due to outdated addresses, and CVV is vulnerable if leaked), so it is advisable to integrate them into a multi-layered approach.
Payment methods and best practices on the user side
On the card, the store asks for name, number, expiry date and often CVV. If there is a bank gateway, the process is completed in a secure environment outside the store.who does not see the data; otherwise, custody and risks fall on the store. (see payment in cash or by card)
On fraudulent websites, The card details end up in the hands of criminals. for unauthorized purchases or social engineering. A simple measure: use an "online only" card with a limited balance to minimize the impact of incidents.
Intermediaries (PayPal, Amazon Pay, Google Pay, Apple Pay) They act as a layer of privacy and dispute resolution.The store doesn't see the card, and the provider helps if there's fraud. However, be careful with... phishing that impersonates these brands.
With NFC-enabled mobile phones, Google Pay/Apple Pay allow contactless payments and payments within apps. Security is based on tokenization and device authentication.But it's not a good idea to "trust everything": check what purchases you make, the permissions of the apps, and the amounts.
Bizum, integrated into mobile banking, speeds up transfers between individuals and businesses. Requires official bank app, 4-digit PIN and two-factor authenticationMany scams arrive via SMS asking you to accept payments: always verify the sender before confirming.
In Spain, OSI/INCIBE offer resources and a 017 helpline for cybersecurity questions. Training yourself and knowing how to identify recurring frauds (such as BEC or phishing) prevents a lot of trouble..
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Online financial platforms, PSD2 and open banking
Digitalization, accelerated by the pandemic, has boosted fintech and open bankingThe PSD2 regulation enables the aggregation of accounts and payments initiated by third parties, opening up the range of platforms.
Common types: online banking, wallets, PFM (personal finance), crypto, trading, etc. Electronic wallets facilitate small and frequent payments and they are usually free between wallets, charging for withdrawals to bank accounts.
PayPal is the classic example of an extended wallet and alternative to a card. In their scheme, the one who receives the money usually assumes the commission., which simplifies the buyer's experience.
In crypto, blockchain secures transactions and controls issuance. Advantages: lower cost due to disintermediation and almost immediate settlementUnlike PayPal, a Bitcoin transaction is P2P over a public, distributed network, and the recent wave of MiCA licenses marks relevant regulatory changes.
Online trading, becoming increasingly accessible, requires broker and associated commissionsEase of use does not eliminate risk: with leverage you can win big or lose it just as quickly.
Risks on these platforms: lack of financial education, security (crypto is holding up today, although quantum computing is a challenge for the future), volatility, potential addictions, opaque fees, regulation (check brokers under MiFID) and data protection.
Some solutions offer guided tours or interactive tours To understand functions and risks. Use them, but don't delegate critical judgment: your best defense is understanding the product.
The cost of fraud and how to set up a secure payment system
eCommerce fraud is costly: in the UK, hundreds of millions of GBP were stolen in the first half of 2022 through both authorized and unauthorized scams, and In 2020, e-commerce fraud accounted for 66% of all card fraud. with hundreds of millions of pounds. Furthermore, BEC (business email compromise) dominates payment fraud attempts and More than half of AP departments report email attacks.
In cybersecurity, the British government indicates that 39% of companies detected attacks; of these, 89% was phishing and 21% were due to DDoS attacks, malware, or ransomware. The cost of breaches also plays a significant role: IBM/Ponemon estimates millions per incident in the United Kingdom.
Four key steps when setting up online payments
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Understanding what is suspicious: Multiple orders from the same IP address with different cards, unusual tickets with express shipping… use multiple data points to to differentiate between “good” and “bad” transactions.
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Activate AVS + CVV2: address and security code verification, Together, they raise the bar for fraudsters..
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PCI DSS compliant: with an expert partner to manage scanning, training and support, You will reduce the probability and impact of gaps.
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Choosing the right processor: A supplier that prioritizes safety and understands your model will help you balancing friction and conversion.
Strategies, suppliers, and tools for operating with less risk
Many platforms delegate the risk of payments to a third party to lighten operational burdens. “Managed risk management” solutions cover credit and fraud monitoring, and even unrecoverable negative balances. of connected businesses, freeing the platform to focus on its core.
Those who choose to manage risk internally They need engineering, operations, and capital to absorb losses., as described by risks of operating with trading platformsIn addition to integrating anti-fraud tools, monitoring and reporting loss KPIs, legal and support services are also key: responding to audits and user inquiries regarding chargebacks or transfer delays is essential.
Among the available kits, AI-based protection and configurable rules stand out for block accounts and risky transactionsonboarding workflows that collect documentation and adapt to regulatory changes, identity verification solutions for stop fake accounts, advanced analytics (e.g., SQL-like queries on your data) and webhooks for alertsIn payments to third parties, flexible schedules allow for deferring or slowing down payments depending on the seller's profile.
There are also payment orchestration platforms with real-time fraud detection and routing through the most efficient authentication process, maintaining independence from the acquirer to optimize authorization and security.
On the chargeback minimization front, there are networks that connect issuers and merchants (such as Ethoca) to Notify of chargeback attempts and enable fast refunds before the formal process escalates, saving time and fees.
Risk models and machine learning applied to payments
Beyond rules, models can track payment behavior over time and anticipate defaults or fraud as economic or customer conditions change. Techniques such as GBDT, SVM, or classic methods (logit, discriminant) have proven effective in scoring and detection scenarios.
Selecting variables matters: Genetic algorithms help to choose relevant traits with efficient heuristics; its typical flow iterates population, fitness, selection, crossover, and mutation until it converges on subsets with better predictive power.
There are data challenges: missing values and, above all, extreme imbalance between “good” and “bad”Subsampling and oversampling can help, although they are not a panacea; their usefulness depends on the dataset and they must be rigorously validated.
The models require continuous monitoring and recalibration To avoid drift. When patterns change (new fraud tactics, macro changes), performance drops if not updated. Stability metrics, backtesting, and champion/challenger testing are recommended practices.
Finally, AI is an extremely powerful tool, but It must be complemented with business knowledge and good risk governanceCombining data, experience, and technology is what makes the difference in the bottom line.
If we look at the whole picture—threats, technical controls, risk processes, standards, and tools—, The recipe involves carefully evaluating who you bring on board, monitoring what happens, putting a stop to it in time, complying with regulations, and relying on reliable partners.All of this while offering customers and sellers a seamless experience, with secure payment methods (card, wallets, NFC or Bizum) and without letting our guard down against scams that, unfortunately, keep evolving.
