Fighting payment fraud: how Firewall can secure your business

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Fighting payment fraud: how Firewall can secure your business

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$41 billion was lost in 2022 due to payment fraud, and the figures are rising. Why is it so? The answer is quite simple: fraudsters are becoming smarter and more sophisticated in their schemes, while businesses are content with a minimal set of security tools without taking steps to improve their fraud prevention system.

The only way for businesses to detect and prevent fraud before it happens is to become proactive in their approach. The good news is that fraud management technologies are advancing and can offer you the best protection possible. Let's talk about what your ideal fraud prevention system should look like and what it takes to implement it.

Payment fraud types in brief

The first step in fighting fraud is to recognise your enemy. So let’s get to know the widespread types of payment fraud.

Credit card fraud

Stealing credit card information is the most common type of payment fraud. Various methods exist for criminals to get hold of someone's card numbers, including phishing emails or creating fake websites.

Credit card fraud can include:

  • Using someone else's credit card without permission.
  • Making unauthorised withdrawals from a card or an account.
  • Creating a fraudulent credit card using information from an existing one and then using it to make purchases or receive cash.


Phishing is a type of online fraud where criminals send an email to trick a person into revealing personal or financial information.

Phishers typically create websites that look like legitimate financial institutions or government agencies. They then send emails or make phone calls that claim to be from those organisations, directing people to visit the fake site and enter their personal information, such as bank account numbers, credit cards, or Social Security numbers.

Phishing attacks often target businesses because companies tend to collect more sensitive data about their customers than individuals do.

Account takeover (ATO)

ATO occurs when someone takes over an existing account and uses it for their own purposes. This can happen with any account at a financial institution, not just with credit cards.

The most common way accounts are taken over is by hackers who gain access to customer information through phishing attacks or malware. Alternatively, the company’s insiders may have access to sensitive information that they can use to steal passwords or PINs from customers.

Man in the middle attack

In a man-in-the-middle (MITM) attack, a hacker intercepts a user's connection to a website and then pretends to be the real website with the intention of gaining access to the user's sensitive data like usernames, passwords, and financial information. This form of attack is especially effective against websites and apps that don't use encryption or authentication tools.

Clearly, there are many ways to steal sensitive financial data from your customers. But what are proven methods to keep fraudsters at bay? This is where fraud management and prevention tools come into play.

The purpose of payment fraud management

Payment fraud management strategies are designed to prevent such fraud from occurring. It’s an ongoing process of collecting and analysing information to detect fraud patterns, investigate the suspected fraudulent activity, and take corrective actions when applicable.

The objective of fraud management is to identify and mitigate risks before they happen so you can focus on what matters: growing your business.

There are several fraud management strategies that any business can use, such as adding additional security layers, expanding the verification process, educating customers about potential risks, and implementing technology solutions. But the best bet is a multi-layered approach where you combine multiple tools and processes to protect yourself.

Fraud prevention system components

When it comes to building an antifraud system, you can either use internal resources and build your own solution or trust a third-party provider to protect your payments. Alternatively, you can combine internal and external resources that complement each other.

But what exactly should a payment fraud prevention system do? What features should it have? And how can you build one yourself?

An effective fraud prevention system consists of the following components:

Data analytics. In the case of payment fraud prevention, data analytics can help you identify suspicious transactions before they become losses. It helps you to detect anomalies in transaction patterns, identify likely fraudulent activity through behavioural analysis, as well as monitor external risk factors that may trigger fraudsters.

Rule engine. Rule engines are used to make decisions based on a set of input data, which could be bank card credentials, IP addresses, or other information. For example, you can create a rule that says "If the IP address has been flagged as fraudulent by our payment processor, do not allow this transaction." You can also block a particular country, card, BIN, etc. The rules can be customised for each merchant or each business unit within a merchant's organisation.

Scoring system. The scoring system is a way of assigning points to the characteristics of a transaction. It evaluates every transaction according to specific parameters and adds or deducts points respectively. The system then blocks or processes the transaction based on its final score. The higher the score, the greater the risk of fraud. A historical analysis of previous transactions provides the basis for the scoring system.

Blocklisting. Blocklisting prevents transactions that match certain criteria from being processed. For example, if you have a customer who has made several fraudulent payments in the past, you can add them to your blocklist so that all payments from that customer are rejected.

Machine learning. The goal of machine learning is to create algorithms that can automatically make decisions based on the data they've learned. The algorithms are trained using historical transaction data and then apply their knowledge to new transactions to predict if they are fraudulent or legitimate. The more historical data you collect, the more precisely the algorithm will classify normal transactions versus those that are likely to be fraudulent.

How Corefy’s Firewall helps overcome security threats

Protecting your business from fraud is more than just installing antifraud software. This is an ongoing, time-consuming, and often costly process that requires a comprehensive approach. Another stumbling block is finding an antifraud system that is reliable, cost-effective, and fits your business needs.

Understanding the challenges that most merchants face, we developed Firewall – an antifraud solution which determines whether to process transactions based on rules you set. The service evaluates each incoming and outgoing transaction in real time based on various attributes, such as customer IP, transaction amount and currency, merchant account ID, card-issuing country, customer metadata, and many more. You are free to add as many rules as you want and use different types of blocklists that can be automatically replenished and cleared.

During our internal research, we discovered that even a delay of 0.05 seconds in transferring data to an external antifraud system reduces conversion rates. That’s why we developed our own antifraud service capable of protecting our clients' transactions at all levels without sacrificing conversion.

Denys Kyrychenko, Co-founder & CEO

The Firewall can interact with external third-party scoring or anti-fraud services (for example, MaxMind or to make more accurate transaction decisions, but at the same time is completely independent of other services in your ecosystem. By using the service, you’ll be able to build your own antifraud strategy that is fully manageable and scalable to meet your business needs.

Eliminate threats and schemes that can harm your reputation, revenue, and customers' trust by utilising our feature-rich antifraud solution. Contact us to get started!

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