The Severity of Fraud and How It Can Risk Your Card Program

‍At Qolo, we place the highest priority on fraud prevention. Our extensive fraud prevention services, built from decades of industry experience, provide you and your cardholders with the protection you expect from a payment partner. In today’s blog, we highlight some of the most significant impacts fraud can have on your business and the key factors to consider when selecting a payment partner.

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‍The Impact of Fraud on Your Business

‍Financial Loss: Fraud has a significant financial impact, resulting in substantial monetary losses for individuals and organizations. The ripple effects touch multiple facets and stakeholders within the transaction flow. Unauthorized card transactions can lead to financial losses for the cardholder, the card program, and the issuer. In 2024 alone, fraudulent transactions amounted to a staggering $5 billion.

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Operational Headache: Fraud impacts more than just finances; it also imposes considerable operational burdens. Managing fraudulent transactions demands extensive resources, including supporting affected cardholders and collaborating with banks and issuing partners to recover losses. This administrative overhead can significantly strain your organization’s time and resources.

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Chargebacks: Fraudulent transactions often result in costly chargebacks for both merchants and issuers. Chargebacks can cost a card program anywhere between $20 and $100 in processing fees. This does not include the additional disruption to operations and administrative overhead.

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Loss of Cardholder Trust: Experiencing fraud can lead to a loss of trust and confidence that is difficult to rebuild and can devastate a business’s brand reputation, sometimes irreparably. Customers who feel their financial security has been compromised are unlikely to return, and negative word-of-mouth can spread quickly, further damaging the company’s image and reducing future business opportunities.

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Regulatory Impacts: Non-compliance with regulations can result in substantial fines and constraints on your business. Businesses may face increased audits, operational disruptions, and legal mandates for protecting cardholder data. Regulatory violations can lead to lawsuits, compensatory damages, and even criminal charges against executives. Regulatory bodies can also restrict a business’s ability to process payments, impacting operations and revenue.

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Mitigating and Preventing Fraud with Qolo

Implementing robust fraud prevention measures is crucial for the success of your card program. Without them, your business faces substantial risks that can severely impact its operations and stifle growth. Whether you’re partnering with a payment provider or developing an in-house card program, prioritizing a comprehensive fraud strategy is essential to safeguard your business and ensure its long-term success.

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Over the coming weeks, we will be sharing key tactics and preventative measures you should apply to your card programs, as well as details on how Qolo leverages its Fraud Services to keep our customers safe from fraud.

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Stay tuned for more insights on protecting your business and enhancing cardholder trust. Follow Qolo’s page for the latest updates and valuable insights.

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