Unlock Revenue Potential with Smart Fraud Prevention

Fraud prevention is about more than just reducing loss; it’s a powerful engine for revenue growth and customer loyalty. Companies that approach fraud with a modern, data-driven strategy unlock significant financial gains.

We all know you can stop 100% of fraud by declining 100% of the transactions – but if you do, you’ll go out of business. There’s a fine line between taking on big fraud losses and missing millions in revenue. Industry analysts and fraud experts suggest that, depending on the merchant’s screening and review process, an estimated 30% to 65% of all rejected online orders are actually legitimate. This means that, for every 100 declined orders, 30 to 65 could have been genuine purchases.

The impact on customer loyalty is significant: in a Sapio survey, 33% of shoppers reported that they wouldn’t return to a retailer or ecommerce business after experiencing a false decline. This translates to a permanent loss of 9 to 21 customers for every 100 rejected orders. Even worse, false positives can cost merchants up to 75 times more than real fraud attacks.

Adding to the complexity, businesses face dual challenges: detecting third party fraud (external attackers exploiting stolen credentials) and first party fraud (legitimate customers committing intentional chargeback fraud or friendly fraud). As first party fraud is committed by the customer, the risk signals and detection techniques differ significantly from that of third party fraud, requiring tailored approaches to catch both effectively, such as bespoke rulesets or advanced machine learning (ML). Not only must detection methods identify behavior that doesn’t match what is expected for a given user, it must also identify users who are who they say they are, but have nefarious intentions.

The problem is significant for financial institutions, as well. LexisNexis reports that every dollar lost to fraud costs financial institutions $4.41 – but with false positives so pervasive, balancing fraud prevention with customer experience is paramount.

By reducing false positives through modern, data-driven and real-time fraud prevention measures, companies can recover substantial revenue and improve customer satisfaction.

This guide reveals how effective fraud management can transform your business – from increasing conversions to gaining customer trust and positioning your brand for growth.

How Can a Fraud Detection Platform Increase Revenue Opportunities for My Business?

Let’s examine the various ways in which an intelligent, data-driven fraud detection platform can drive revenue and business opportunities.

Reducing False Positives and Boosting Conversions with Real-Time Data Orchestration

False positives – legitimate transactions mistakenly blocked as fraud – are costly. Every falsely declined transaction is a lost customer and lost revenue. They increase operational costs through unnecessary manual reviews and limit business growth by rejecting new customers or transactions outside expected patterns.

This mix of immediate and long-term impacts makes accurate fraud detection essential for both profitability and customer retention. What’s more, customers are demanding faster payment methods. Meeting that customer demand by offering real-time payments without having real-time controls is a recipe for fraud losses; many of these faster payment methods are irrevocable, making funds recovery incredibly difficult, further impacting the bottom line.

Real-time data orchestration can be leveraged to integrate and unify data in real time, for a comprehensive view of user activities. This reduces the gaps that often lead to false positives by providing essential information needed to approve the transaction. With unified data pipelines, fraud detection systems can make timely, context-rich decisions, avoiding errors caused by outdated or fragmented data.

Orchestration ensures accurate anomaly detection by combining disparate data sources to provide critical context, reducing unnecessary declines and allowing more legitimate customers to complete their transactions seamlessly. Additionally, dynamic rule updates and machine learning retraining based on real-time, unified data further refine decision-making processes, enhancing both accuracy and adaptability.

The result? Fewer false positives, higher conversion rates, and a smoother customer experience – all contributing to greater revenue and sustainable business growth.

Elevating Customer Experience with Frictionless Transactions

Fraud prevention and customer satisfaction go hand in hand. Customers expect a fast, secure checkout experience, and if a company delivers, they’re likely to come back. Leaders like Amazon and Netflix have mastered this, using fraud prevention tools that reduce intrusive checks and help customers to glide through purchases without any hassle.

Here are some of the key benefits of a frictionless transaction:

• Higher Conversion Rates and Lower Cart Abandonment
  A streamlined checkout process reduces obstacles, encouraging customers to complete purchases and reducing cart abandonment.
• Enhanced Customer Experience and Loyalty
  Smooth, hassle-free transactions improve satisfaction and build loyalty, as customers are more likely to return to brands that prioritize ease of use.
• Improved Brand Reputation
  Companies offering frictionless transactions are viewed as reliable and user-friendly, avoiding reputational damage caused by a poor experience.
• Reduced Operational Costs
  Automated and efficient transaction systems minimize manual reviews, saving time and resources.
• Higher Approval Rates and Better Fraud Prevention
  With advanced technology, frictionless transactions can balance security and convenience, minimizing false declines and using risk-based authentication to approve legitimate purchases.
• Increased Global Reach and Data-Driven Insights
  Frictionless transactions support diverse payment methods and payment processing solutions, accommodating global customers and generating clean data for analyzing customer behavior and improving future experiences.

By integrating similarly effective fraud tools, companies can achieve frictionless transactions, creating a better experience that drives customer loyalty and repeat sales.

Fueling Growth with Fraud Data

Fraud platforms do more than block threats and reduce false positives; they drive business growth by turning fraud data into customer insights.

Modern fraud solutions analyze patterns to reveal high-risk behaviors, distinguish fraudsters from legitimate customers, and show potential fraud hotspots. This information can shape your marketing strategy and product offerings.

Risk-free Marketing Promotions

Marketing promotions can attract a surge in activity, including legitimate customers and potential fraudsters looking to exploit vulnerabilities. In fact, 53% of ecommerce merchants reported that promotional abuse increased in 2024. Advanced fraud detection tools can analyze patterns in real time, such as unusual account behavior or rapid coupon redemptions.

Data orchestration plays a vital role in integrating insights across multiple channels – like online purchases, app interactions, and social media engagement – allowing businesses to detect anomalies and prevent abuse without alienating genuine customers. By embedding fraud prevention into the planning stages of promotions, you can minimize losses and protect customer trust.

Safer Expansion

When entering new markets or launching products, having a fraud system that adapts to different regions or segments improves risk management and opens new doors for expansion.

Consider an ecommerce company that notices a spike in fraudulent activity from specific geographies. With a sophisticated fraud platform, they can use this insight to segment high-risk regions and offer tailored, secure purchase experiences for genuine customers in those areas – protecting revenue without sacrificing growth.

Additionally, identifying trends such as preferred payment methods, peak purchasing times, or product preferences among genuine customers can guide marketing strategies, optimize customer experience, and ultimately drive higher conversions. They may even be able to open up new revenue streams.

Achieving ROI with Advanced Fraud Detection

The ROI of modern fraud technology goes well beyond reduced fraud loss. Many companies see their revenue increase after implementing Artificial Intelligence (AI) powered fraud solutions, as a result of fewer false positives and chargebacks, and a better all around customer experience.

Take, for example, one DataVisor customer – a global financial institution operating in over 200 countries – that was losing millions to undetected fraudulent transactions. Their existing fraud prevention tools struggled with sophisticated, evolving attacks, leading to missed threats and escalating chargeback costs. Using DataVisor, they were able to detect emerging fraud patterns in real-time with 94% accuracy and reduce false positives to just 0.9%.

The impact was substantial: the institution saved over $12 million annually in chargebacks alone. By identifying fraudulent accounts before transactions occurred and delivering results in under 10 milliseconds, DataVisor not only reduced losses but also improved the customer experience by minimizing false declines.

The cost savings of advanced fraud detection and prevention solutions are equally compelling. Manual reviews and chargebacks eat up time and resources, especially as transactions increase. Reducing these costs through automation drives efficiency, allowing teams to focus on strategic work rather than manual processing.

But effective fraud prevention does more than protect revenue – it can enhance your brand reputation and provide competitive advantage, as well. An organization known for its commitment to security stands out, gaining customer trust. According to PwC, 87% of consumers will walk away if they don’t trust that their data is secure. By showcasing strong fraud prevention, you’re not just protecting your customers; you’re making trust a cornerstone of your brand.

Essential Features of a Revenue-Boosting Fraud Platform

For fraud prevention to truly impact revenue, your platform needs features that deliver real-time insights and rapid action.

• Real-Time Decisioning
  Instant decisions keep transactions flowing without unnecessary delays.
• Machine Learning and Predictive Analytics
  AI learns fraud patterns fast, enabling your system to prevent threats before they materialize.
• Customizable Rules and Risk Scoring
  Tailoring fraud settings for your business needs means catching more fraud with fewer customer disruptions.
• UML for Tackling First and Third Party Fraud
  By leveraging unsupervised machine learning (UML), merchants can identify nuanced fraud patterns tailored to their operations while staying agile against evolving threats. Combining ML-driven insights with comprehensive data orchestration offers a powerful approach to addressing both first and third-party fraud, protecting revenue and customer trust.

These features are not just nice-to-haves; they’re essential to creating a high-performing fraud solution that drives revenue by preventing fraud and ensuring more legitimate transactions get through.

As technology evolves, fraud methods will advance alongside it. A scalable fraud solution is key to staying ahead, allowing you to adapt to new fraud tactics without missing a beat. An adaptable fraud platform supports growing transaction volumes and is able to adjust to new channels such as mobile and IoT, and provide protection across every customer touchpoint.

However,  it’s essential to strike a balance between securing transactions and ensuring a frictionless experience for customers. Strategies such as risk-based authentication allow most customers to glide through, while high-risk transactions trigger additional checks. This way, you protect your business without scaring away new customers or driving away legitimate users.

Flexible fraud prevention policies that align with your customer acquisition goals help ensure security doesn’t become a barrier to growth. By allowing safe, quick transactions, you can encourage more sign-ups, transactions, and brand loyalty.

Achieve a Better Bottom Line with DataVisor

Fraud prevention is no longer just a cost-saving measure – it’s a growth driver that can boost revenue and your brand reputation among loyal customers, while streamlining fraud operations. Advanced fraud platforms can also help to create new opportunities by reducing false positives, enabling a frictionless transaction, and building customer trust.

Learn how a partnership with DataVisor can help you unlock revenue potential with its advanced fraud detection technologies. Request a demo today.

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Meet the Authors
	AMANDA PETERSON Director, Fraud and Risk TabaPay Amanda Peterson, CAMS, CFCS, is a leading force in financial crime prevention, driving fraud and risk strategy at TabaPay, a payment processor that enables instant payments. Leveraging her deep expertise in banking, technology, and payments, she champions secure and innovative money movement solutions for the fintech industry.
	MIKE LAVIA Director of Payments DataVisor With years of experience in the payment space, Mike leads GTM efforts and partners with Fortune 500 financial institutions and FinTechs to mitigate fraud faster than ever.