Transaction laundering, the new face of payment fraud is increasing and getting popular in the world of e-commerce.
Studies revealed that there are as many as 6% to 10% of additional unauthorized e-commerce sites that banks may be processing without their consent or awareness. A digital version of money-laundering, engaging in illicit commerce while using legal means to get paid.
Transaction laundering is another form of money-laundering and it is illegal.
Detecting fraudsters are becoming a major challenge not only for banks but financial service organizations like payment service providers as well. There have been dozens of cases where legitimate-looking websites were caught selling illegal products.
Acquirers, banks, and other institutions focused on websites as the central of transaction laundering while the mobile era has opened up a new ground for scammers to operate in. They provide new opportunities for fraudsters to do their work by routing payments for illicit goods and services through their own legitimate front accounts.
Mobile wallet apps, NFC chips, and payment apps are some of the new ways payments are being collected. Not to mention opening up an on-line storefront using web tools, which anyone can do is very easy.
Micro-merchants expansion of doing business on-line and the greater reach they have now to mobile technology, business opportunities for scammers doing transaction laundering have never been better.
It is important for the industry to know what is happening, and how great the risks are. It’s a new challenge for the payments industry, learning and educating ourselves on those dangers is a priority.