AVOIDING FRAUD IN ELECTRONIC PAYMENT SYSTEM CARDS SYSTEMS

Abstract

Nowadays, fraud is a major issue in electronic payment systems. The aim of this paper is to give an overview of the existing techniques for preventing fraud in electronic payment systems. Prevention and detection of fraud play a very important role in risk management and fraud management in the payment cards industry. The end goal is to reduce fraud by applying a multidisciplinary approach. A system for the prevention of payment card fraud is a complex system which gathers knowledge from several sources. The techniques for the prevention and detection of fraud are classified in several groups, applying different criteria. The paper shows the current state of affairs in the world and gives a detailed comparison of modern techniques for the prevention, detection and management of fraud in electronic payment systems. From the financial point of view, the operational risk is shown as the most significant risk in transactional systems, and a model for measuring such risk. Example of possible improvements in the prevention of fraud in electronic payment systems is given.