Kenya: PesaPal advises businesses to integrate payment gateways to prevent online fraud

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  • PesaPal has advised businesses in Kenya and the wider region to use fraud detection tools as more transactions move online and e-commerce becomes mainstream
  • Outgoing Pesalink Chief Security Information Officer Stacy Chege noted that online fraud is a growing threat to Kenya’s economy and to the country’s personal financial security
  • The expert said merchants must safeguard themselves and their customers against online payment fraud by integrating payment gateways like Pesapal as a secure checkpoint for online transactions

Businesses in Kenya should incorporate fraud detection tools as more transactions move online and e-commerce becomes mainstream.

This is according to the outgoing Pesalink Chief Security Information Officer Stacy Chege noted that online fraud is a growing threat to Kenya’s economy and to the country’s personal financial security.

The expert said merchants must safeguard themselves and their customers against online payment fraud by integrating payment gateways like Pesapal as a secure checkpoint for online transactions.

“With the digital economy evolving rapidly, businesses of all sizes need to re-evaluate their position and tools when it comes to fraud management. Employing approaches that have been proven to be the most efficient in combating card and online payment fraud can minimise losses and chargeback,” Chege said.

Card fraud and buyer remorse are the leading instances of fraud for most merchants in Kenya. In 2021, the Kenya National Bureau of Statics reported that data breaches like data extortion, data leakage, and data disclosure constituted almost 71 per cent of the cyber-attacks for Kenyan businesses.

“Our aim is to boost people’s trust and confidence in online transactions. We securely authenticate any customer’s card and device details when they make a purchase online before a transaction ever reaches the bank,” Pesapal Head of Risk and Compliance Anthony Irungu said.

“At Pesapal, we have an extensive monitoring system to protect our merchants and customers from online payment fraud.”

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Despite the substantial risk that fraud poses to businesses, many companies lack systematic systems and procedures for preventing, detecting, and responding to fraud.

Some of the fraud detection tools that Pesapal employ to reduce online fraud-related losses include, Payer Authentication (3-D secure), device identification, flagging suspicious transactions, mapping out of high-risk countries and sectors, CVV or Card verification Number (CVN), and Address Verification Service (AVS).

“At Sarova Hotels, we follow protocols such as observing patterns of a region. We are also able to flag any suspicious transactions. One way is to limit the number of large transactions, which is an essential step toward avoiding chargebacks. In addition, we limit the number of failed transactions that go through the payment gateway,” Sarova Group Revenue Manager Felix Musa said.

“As e-commerce continues to grow, cybercrime is on the rise. Criminals are constantly spotting opportunities to abuse people’s trust and trick them more and more. Merchants, therefore, need a full stack of payment fraud detection tools via their payment gateways.”

To protect themselves, companies need to understand the pace, direction, and paths along which fraud is moving and the trends shaping the future of fraud management. Cardholders and merchants must also be vigilant and ensure they are prudent while transacting online.

“Every eCommerce business owner should know that online payment fraud is on the rise. The rollout of EMV chip cards made it harder for fraudsters to pass off a counterfeit card at point- of-sale, now, all that criminal payment activity that used to happen in person has moved online,” Chege added.

Combatting online payment fraud is facilitated when the public is fully educated and aware of its types and the prevention methods available. People are reliant on the Internet; the possibility of being breached by hackers and fraudsters is growing, especially as socialising, online shopping and banking are carried out through personal computers or mobile devices.

They spoke during a Pesapal Caffé Session, an initiative by Pesapal targeting professionals in various sectors. The aim is to connect individuals, share learnings and transfer knowledge with a critical focus on the digital economy.

In a related story, The Exchange Africa reported that e-commerce and payment company Pesapal Limited has been accredited as a Payment Service Provider in Kenya and an Application Service License for Tanzania, amid the acceleration of the online payment industry in Africa, which has been growing since the beginning of 2020.

Pesapal said the milestones will enable consumers and businesses in the two East African economies to make and receive online payments seamlessly.

Kenya’s Central Bank has already granted authorization to Pesapal Limited as a Payment Service Provider (PSP) to carry out Payment Gateway Services in compliance with the law.

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Wanjiku Njuguna is a Kenyan-based business reporter with experience of more than eight years.

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