Glossary

Fraud prevention

Set of rules and systems that analyze a transaction before approval to identify fraud risk.

Fraud prevention is the set of rules, scores, and systems a payment platform uses to analyze a transaction before approving it, looking for risk signals such as the use of a stolen card, unusual purchase behavior, or a pattern associated with known fraud.

A poorly calibrated fraud prevention system has two opposite and equally costly effects: approving fraudulent transactions, which generate chargebacks later, or declining legitimate transactions, which needlessly drag down the approval rate and revenue.

Fraud rules set too tight reject good customers, set too loose they hand the account to chargebacks. The right setting is not a configuration, it is a weekly read of your own numbers.
Wellington CostaGlobal Payments Specialist

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Written by Wellington Costa Global Payments Specialist

Writes about payment infrastructure, checkout conversion and chargeback reduction. Works directly with digital product sellers, affiliates and creators selling to more than 40 countries through Mundpay.