Stay tuned with CashEssentials news ! - beyond payments
By subscribing, you accept our Privacy Policy.

Alternative payments open the door to fraud

Categories : Cash generates security, Cash is trust
March 28, 2017
Tags : Alternative modes/methods of payment, Fraud, Mobile Payments, Security
Fraudsters are turning to alternative payment methods and exploit the existing loopholes to conduct illegal transactions.
Communication Team / Equipo de Comunicación
According to G2 Web Services – a merchant risk intelligence solution provider for acquirers, commercial banks and their value chain partners – cybercriminals are increasingly turning to alternative payment methods (APMs) to conduct illegal activities. APMs include peer-to-peer payments, money service businesses, e-wallets, mobile payments, prepaid cards, vouchers, bank debits, credits or linked bank accounts and cryptocurrencies.
Thanks to increased credit card security, fraudsters are moving towards these new payment methods that are subject to less scrutiny and which might contain exploitable loopholes. Dan Frechtling, CMO at G2 Web Services, explains that weaknesses are frequently found in newcomers’ systems who prefer to focus on their expansion plan, underestimating the importance of protecting their network.
G2 Web Services’ investigation demonstrated that crooks take advantage of alternative payments to conduct mainly three types of activities: payment hustling, sequential digital wallets and local law arbitrage. The payment hustle is when a fraudster moves to a new payment type after he/she was shut down on a first payment instrument, usually a credit card. Sequential digital wallets are created to hide illegal activities behind a registered e-wallet linked to a bank account. There are two wallets. This first one is a named account that feeds a second, anonymous account. This system enables criminals to conduct transactions that cannot be tracked back to the first wallet. The last activity, called local law arbitrage, is when consumers use the mobile wallet of another country to buy goods that are illegal in their respective countries.
Frechtling affirms that it is the responsibility of financial institutions and APM providers to adopt know your customer’s customer (KYCC) procedures to prevent frauds and money-laundering.
To read the original article, please click here.