Guide to detecting and preventing payment fraud

• The new fraud landscape
• What is payment fraud?
• How does payment fraud work?
• What can businesses do about payment fraud?
• How can Visa help prevent payment fraud?
• Use cases
• FAQs

As online and mobile transactions increase, and new payment technologies emerge, so do the opportunities for fraudulent activity. And with bad actors using increasingly sophisticated tactics, it can be a struggle to stay one step ahead.

Payment fraud is a widespread threat — global eCommerce fraud losses are projected to rise to $43.6 billion by 2027 (up from $33.2 billion in 2025), while more than 98% of merchants report experiencing some form of fraud in the past year.¹

As a first line of defense, banks and financial institutions play an important part, monitoring transactions and identifying unusual behavior to stop fraud before it impacts customers or merchants. And while individual cardholders can be tricked by phishing scams or malware, financial institutions can detect and block out-of-pattern activity, ensuring consumers aren’t charged for unauthorized purchases and merchants aren’t affected by fraudulent chargebacks.

Balancing security and customer experience is a constant challenge when tackling payment fraud. Too much friction can drive away customers, while weak defenses invite risk. The good news is that artificial intelligence-powered tools, advanced authentication and proactive monitoring can protect payments while keeping them fast and seamless.

Let’s take a closer look at how payment fraud works, the most common types of attacks and the steps you can take — alongside partners like Visa — to detect, prevent and manage fraud effectively.

Businesses of all sizes — whether operating online, in-store or a hybrid — can fall victim to payment fraud, which can have a wide-ranging impact:

• Financial loss and chargebacks: When payment fraud occurs, businesses often bear the cost of refunds, chargeback fees and potential penalties from payment processors.
• Reputational damage: Customers abandon merchants they feel they can’t trust, with 35% saying they would leave after one disputed transaction.³
• Legal and regulatory risk: Businesses must comply with Payment Card Industry Data Security Standards (PCI DSS) and regional data protection laws. Failure to do so can lead to fines or legal action.
• Operational disruption: Investigating fraudulent activity diverts time and resources from day-to-day operations. Teams must update systems, revise policies and manage customer communications — all of which can slow business growth.

What tactics do payment fraudsters use?

Criminals are constantly evolving their tactics and use sophisticated technologies such as automated bots, spoofed websites and even artificial intelligence-generated emails or messages to appear legitimate. Others exploit the rise of real-time payments, moving stolen funds instantly before detection.

Smaller businesses can be especially vulnerable because they may not have dedicated fraud teams or transaction monitoring capabilities in place. Fraudsters look for weaknesses in systems, policies or human behavior that they can exploit and turn into financial and operational losses. In addition, consumers are also vulnerable to scams like authorized push payment (APP) fraud, identity theft and phishing attacks.

Here are some of the most common payment fraud tactics used today:

• Phishing and social engineering: Fraudsters impersonate trusted sources, such as banks, merchants or executives, to trick people into sharing login information or payment details. These fake messages often use urgency, like ‘verify your account now’, to prompt quick action.
• Skimming: A skimming device is placed on an ATM or payment terminal to capture card information and PINs. That data can then be used to create counterfeit cards or make unauthorized online purchases.
• Identity theft: Criminals steal personal data — such as names, addresses or social security numbers — to open new credit accounts, apply for loans or impersonate victims in financial transactions.
• Malware and hacking: Malicious software can infiltrate business systems, capturing keystrokes or extracting payment data. Outdated software or weak passwords made this easier to execute.
• Enumeration and card testing: Bots automatically test thousands of stolen card numbers on e-commerce sites to identify active ones. Once verified, the data is sold or used for larger fraudulent purchases.
• Authorized push payment (APP) fraud: Victims are tricked into sending money to criminals under false pretenses, often believing it’s for a legitimate purpose. For example, they might pay a fake supplier or respond to a fraudulent invoice. Because real-time payments settle instantly, funds are often impossible to recover.

Challenges in fighting payment fraud

Even advanced detection systems face barriers:

• Real-time gaps: Delays in data sharing can limit pre-transaction intervention.
• Fragmented systems: Unconnected fraud tools risk missing coordinated attacks.
• Operational strain: Manual investigations and dispute processing slow response times and increase costs.

Businesses — whether an eCommerce site or financial institution — need to protect against payment fraud and many are now using automated decisioning to balance security with a smooth payment experience. Artificial intelligence-powered fraud prevention tools not only stop bad transactions but also increase approval rates by more accurately identifying genuine customers.

Here’s how to strengthen your payment fraud controls, and in doing so, protect revenue and reduce chargebacks:

1. Use secure payment methods: Choose payment methods with built-in fraud protection, such as Visa Secure (Visa’s EMV 3DS program), which allows card issuers to verify identity in real time.
2. Strengthen authentication: Adding extra verification steps helps ensure that only authorized users complete a transaction. For example, use multi-factor authentication and biometric verification where possible.
3. Protect data: Replace sensitive card numbers with secure digital tokens, keeping real data out of reach even if systems are compromised. Ensure your business is PCI DSS compliant, meaning you meet industry data security standards for storing and handling cardholder information safely. Maintain strict anti-money laundering and anti-terrorist financing programs to identify and prevent suspicious activity, protecting your business from regulatory and reputational risk.
4. Monitor transactions: Use automated AI-powered fraud detection tools to flag unusual transactions — such as sudden high-value purchases or unfamiliar locations. Visa Advanced Authorization evaluates over 500 risk attributes per transaction, making split-second decisions that can stop fraud before it happens. In addition, use compelling evidence frameworks to document and present evidence that can block or reverse fraudulent disputes.
5. Engage customers: Regularly engage customers and cardholders, encouraging them to use secure sites, enable transaction alerts and report suspicious activity.
6. Educate employees: Human error remains a leading cause of data breaches. Train employees to spot phishing emails, verify payment requests and handle sensitive data responsibly.
7. Limit access and keep systems updated: Only give access to payment data to employees who need it, and keep software, browsers and payment systems updated.

Visa Protect is a comprehensive payment fraud prevention suite that combines artificial intelligence-powered analytics, real-time analytics and layered protection to safeguard transactions across the payment journey. From authorization to dispute resolution, Visa provides tools that help businesses prevent fraud, authenticate customers and manage chargebacks efficiently.

Risk and fraud detection

Visa uses real-time fraud detection to spot suspicious activity and reduce losses before they happen. By reducing manual reviews by over 25%, these tools help businesses prevent online payment fraud.

• Visa Risk Manager (VRM) monitors transactions to manage payment fraud risk across channels.
• Visa Advanced Authorization (VAA) and Visa Deep Authorization (VDA) analyze hundreds of transaction attributes to detect potentially fraudulent purchases in milliseconds.
• Visa Account Attack Intelligence (VAAI) Score / Enumeration Defense stops attempts to compromise accounts or test stolen credentials.
• Decision Manager (DM) supports risk-based automated decisions to increase approval rates and reduce false declines.

Authentication and identity

Strong authentication is a key component of card fraud prevention and can reduce eCommerce fraud by up to 45% and improve transaction approval rates by 9%:

• Visa Secure (EMV 3DS) and Visa Consumer Authentication Service (VCAS) verify cardholder identity for online payments.
• Visa Token Service (VTS) replaces sensitive card data with secure tokens, protecting information from fraudsters.
• Visa Enhanced Authentication Solutions (VEAS) confirms that the user initiating a transaction is genuine, improving authorization accuracy as well as provides risk-based authentication insights without adding friction to the checkout experience.

Analytics and management

Visa’s analytics tools help businesses adapt to evolving threats and reduce payment fraud losses.

• Visa Analytics Platform (VAP) tracks payment fraud trends and patterns.
• Visa Consulting and Analytics (VCA) offers expert guidance to strengthen risk and fraud management programs.
• A2A Protect is a fraud and scam prevention service for account-to-account transfers that provides financial institutions with risk scores for payments.
• Featurespace’s Scam Detect (part of the ARIC Risk Hub) uses adaptive behavioral analytics to spot scam activity before funds leave an account.

In 2023, Visa blocked over $54 billion in attempted payment fraud globally while maintaining 99.9999% uptime, ensuring seamless operations and stronger customer trust for merchants, enterprises and financial institutions worldwide. By safeguarding payments across all networks, account-to-account payments and eCommerce channels, Visa protects every transaction.

The 2025 Global eCommerce Payments & Fraud Report found that Merchant Risk Council (MRC) members — many of whom leverage Visa’s solutions — experience fraud rates up to 10x lower than non-member enterprises, despite facing more complex attacks. IDC’s 2024 Enterprise Fraud Solutions MarketScape named Visa Protect a category leader, citing its access to vast amounts of transaction data and advanced artificial intelligence (AI) and machine learning (ML) analytics for identifying and quantifying fraud typologies.

Strengthening A2A payment security with Visa Protect for A2A Payments

As account-to-account (A2A) and real-time payments expand, financial institutions face evolving authorized push payment (APP) fraud tactics. To mitigate against this, Pay.UK sought to test a new fraud detection and prevention framework capable of identifying threats across the UK’s payments ecosystem.

Visa was selected as one of three partners in a national pilot for a new fraud detection service designed for UK financial institutions. Leveraging Visa Protect for A2A Payments, Visa securely analyzed billions of historical UK bank and payment service provider (PSP) transactions — representing over 50% of the UK’s annual A2A volume. Using artificial intelligence and machine learning models, it detected emerging fraud and scam patterns in real time.

Across all partners, the pilot achieved an average 40% uplift in fraud detection at a 5:1 false-positive rate, with Visa identifying 54% of fraudulent transactions that had already passed through sophisticated bank and PSP fraud systems.

Protecting all card payments with network-agnostic VRM and VAA

Large financial institutions often manage multiple fraud systems for different card networks, increasing operational complexity and cost. Emirates National Bank of Dubai sought to simplify its fraud management while improving detection across both Visa and non-Visa transactions.

Using Visa Risk Manager (VRM) and the network-agnostic Visa Account Attack Intelligence (VAAI) score, Emirates National Bank of Dubai consolidated its fraud operations into a single, unified fraud detection platform. This integration provided real-time scoring and monitoring for all card payments, regardless of network, enabling faster, more consistent fraud prevention decisions.

The bank achieved significant operational efficiency and prevented more than $45 million in fraud losses across Visa and non-Visa transactions. The combined use of VRM and VAAI reduced fraud risk, eliminated system fragmentation and enhanced protection across the entire payments portfolio.

1. Mattei, D. (2024, August). The future of e-commerce: Innovations to protect and enrich the online channel. [White paper]. Datos Insights.
2. The Merchant Risk Council (MRC), Verifi, Visa Acceptance Solutions, and B2B International. (2025). 2025 Global eCommerce Payments & Fraud report. [Report].
3. PYMNTS. (2024, October 4). 35% of cardholders abandon merchant after a card decline. [Web article].