Cryptocurrency marketplaces are accepting more and more credit card transactions. How can they guard against credit card fraud while maintaining their growth trajectory?
Cryptocurrency marketplaces are experiencing rapid growth in trades and transactions as Bitcoin, Ethereum, and other cryptocurrencies become increasingly popular investments. It's easier than ever for individuals to buy crypto digital assets, as marketplaces increasingly accept credit card payments.
Naturally, fraudsters will always follow the money. They'll take the opportunity to hide in plain sight, making fraudulent cryptocurrency purchases using stolen credit card data. The speed with which they can convert fraudulently obtained payment data into digital assets—often for onward migration—is compelling for fraudsters. Cryptocurrencies aren't regulated at this time. Fraudsters know that once they put stolen funds in a crypto digital asset, those funds are very difficult to recover.
Keep growing or manage fraud? You can do both
Cryptocurrency marketplaces that are experiencing rapid growth may have not focused on managing fraud; but if fraud gets out of hand it can lead to lost revenues, put the brakes on growth, and potentially harm a marketplace's brand. If customers have a negative experience at one marketplace, there are plenty of others for them to turn to. So it's critical for a marketplace to maintain customer trust by providing a safe, secure trading environment.
To maintain high rates of growth while protecting against fraud, what steps should cryptocurrency marketplaces take?
Sort out the good guys from the bad
Cryptocurrency marketplaces should look to deploy a fraud management solution that's powerful enough to keep pace with growing transaction volumes and a quickly evolving market.
Working with Cybersource, for example, gives a marketplace access to Decision Manager, our global fraud management platform. Decision Manager helps businesses fight fraud effectively by helping identify genuine customers and drive ongoing growth. Our platform has access to insights shared by Visa from their 141 billion* transactions processed annually and incorporates machine learning (ML) that enables automated risk assessments built on advanced modeling.
It's likely that marketplaces will be handling large numbers of card transactions from customers they've never met before. Without any transaction history to draw on, they may find it more challenging to tell good from bad. Decision Manager can increase a marketplace's confidence with advanced features such as:
- Identity Behavior Analysis—uses ML and cross-merchant data to identify legitimate new customers that have no previous history with you (and helps you more easily recognize good repeat customers)
- Enhanced Device Profiling—builds on device fingerprinting to increase device profiling accuracy, and helps prevent fraudsters from blocking device profiling
- Integrated third-party data sources—for additional identity verification and risk scoring
Cryptocurrency marketplaces that choose Cybersource additionally benefit from the knowledge and expertise of our Managed Risk Services, whose analysts are skillful at identifying global, local, and vertical-specific fraud trends. They're also on hand to help you develop and implement your fraud screening program, and keep it current by fine-tuning your ML strategy.
Learn how Cybersource Decision Manager combines data, automation, smart features and human insights to help you maintain growth while minimizing fraud and check out Visa’s outlook for digital currency.