The payments industry is facing unprecedented risks. First, we are dealing with an entirely different threat landscape. We are no longer trying to protect our platforms against criminals acting on their own. Today’s bad actors are part of a unified network that can affect all the links in the ecommerce chain – including buyers sellers, payment providers, marketplace platforms, and their partners. They are also switching tactics rapidly, so it is getting harder to predict their behaviour – how they will try to breach the platform, what they will do, and why.
The global regulatory community is making strong moves to protect consumers from these new and evolving threats. One of their main focuses in achieving this is an expansion of accountability, which will extend to companies who did not have to worry about that before.
Previously, SaaS companies (such as fintechs and payment platforms) were focused on developing top-notch tech to partner with banks and the regulatory burden was on the banks, not on them. That is changing, and everyone in the ecommerce ecosystem will feel the effects of that change.
If companies do not make compliance a priority, they run the risk of a damaging impact on revenue, as well as their brand and reputation. Enforcement fines and lawsuit costs will number in the millions, even the billions. The losses will not be sustainable. The reputational cost will be similar – negative media coverage will harm consumer trust and cause customer attrition.
All of this can be very challenging to manage, as companies try to achieve their business goals. For example, a payment processor must maintain compliance with regulations and card scheme guidelines. But, if their compliance protocols slow down their onboarding process, they may lose merchants and, hence, revenue. Moreover, because many merchants might try to pivot their business model after onboarding to something that carries more risk, they must be monitored constantly to ensure that they are not causing compliance issues down the road.
We are here to support payment providers and marketplaces in achieving their business goals, with solutions that enable them to grow and scale without compromising security or compliance. We offer the expertise to help them understand the more sophisticated threats that are cropping up in the ecosystem. We have developed our technology with that in mind — our solutions can be customised, they are easy to integrate and implement, and they are flexible, allowing our clients to be nimble as they encounter and address complex and evolving challenges. Our technology provides the speed and accuracy to help our customers identify and prioritise risks in line with their RBA (Risk Based Approach) and AUP (Acceptable Use Policy).
The Financial Action Task Force (FATF) Recommendations form the basis of AML (Anti-Money Laundering) laws worldwide. There are 40 AML and nine CTF (Counter Terrorism Financing) recommendations, but some of them are very specific to how the payments industry operates in the world. EverC helps companies follow these guidelines by facilitating Customer Due Diligence (CDD) through reliance on a third party.
One example is Recommendation 1, which encourages parties to assess risk and apply a risk-based approach, taking the appropriate measures to mitigate money laundering and terrorist financing. Bad actors are rampant in our ecosystem, and the anonymity of it makes it difficult to root them out. But it can and must be done.
Banks all over the world, even in highly regulated environments, are seeing this. Just recently, a widely known global bank had accounts frozen due to connections to Hamas. Terrorist groups not only infiltrate payment channels but they also funnel money through charities, use cryptocurrency, credit cards, etc. We are talking about a full-scale abuse of payment channels, and, at EverC, we are mission-driven to stop it however we can.
As this accountability expands, payment providers and marketplaces need a more robust solution to assess and monitor their risk. EverC solutions have the technology to be customised around each company’s criteria for risk — geography, sanctions lists, line of business, risk tolerance, etc. This enables our partners to implement a risk-based approach, which in turn will help them protect their platforms from illicit activity that is tied to these crimes.
The FATF works as an inter-governmental entity to identify global vulnerabilities and ways to prevent criminal activity in the international financial system. Their recommendations are based on this data, and they set a common standard that allows for consistency and transparency among global AML authorities.
Even though there are regional differences, the FATF Recommendations form a clear and common throughline in AML regulations around the world. Uniting under a common standard, to meet a common goal, companies are better equipped to understand what defines fraud and empowered to enforce these standards. That unity in our industry is very important: the only way to fight a collaborative threat network is to collaborate against it.
This editorial is part of The Paypers' Fraud Prevention in Ecommerce Report 2023-2024, the ultimate source of knowledge that delves into the world of fraud prevention, revealing the most effective security methods for companies to stay one step away from bad actors and secure their businesses.
Ariel Tiger is the CEO of EverC, a cross-channel risk management provider transforming the Internet into a more transparent and trusted place for ecommerce. Utilising groundbreaking, AI-driven technologies, EverC’ s scalable solutions power growth for global marketplaces, top financial institutions and payment providers. Tiger provides dynamic leadership that encourages the global team to pioneer game-changing technology in a rapidly evolving industry. Prior to joining EverC, he was a founding executive at WeWork and M&A Investment Banker at Deutsche Bank Securities and held commanding positions in the Israeli Navy.
About EverC
EverC is focused on powering growth for the online seller ecosystem. With the world’s first fully automated, AI-driven cross-channel risk management platform, we work to make the Internet safe for ecommerce to thrive. Our solution rapidly detects, identifies, and removes high-risk merchants, online money laundering, and illicit products and services, then provides ongoing monitoring to uncover evolving risk.
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