Fraud Prevention in Payments: From Cost to Innovation

By Ian Campbell, Director of Solutions at Equals Money

Fraudsters pose a major threat to online payments. In the iGaming sector, where people bet on sports, gamble in virtual casinos, and play online poker, the measures and controls are needed to combat fraud have become their biggest barrier to innovation. 

Yet these measures are necessary: between 2022 and 2024, fraud in the iGaming sector increased by an average of 64 percent per year. On some gaming platforms, losses now account for up to ten percent of total revenue. These fraudulent practices can undermine customer trust, make investors hesitant, and hold back companies from innovating. To overcome these barriers, a new approach is needed.

Many iGaming companies still respond reactively to fraud threats, by adding more post-transaction checks. On the surface, this seems logical: more checks mean more security. In practice, however, the opposite effect often occurs. Companies get caught up in increasingly complex control systems that can delay payments and actually stifle innovation. Fraudsters seek ways to adapt and bypass these checks, while legitimate customers are left facing longer waiting times and more bureaucracy.

Three Steps to Smarter Fraud Prevention

Adding more controls isn’t the only way to tackle fraud, though. A proactive approach in the following three areas helps reduce fraud:

1) The right collaboration: Stop working in isolation. Effective fraud prevention comes from collaboration between businesses, payment providers, and regulators. By sharing data and expertise, patterns can be identified earlier and new threats stopped more quickly.

2) Prevention during onboarding: Instead of conducting checks afterwards, fraud can be prevented from the start, by taking a more thorough approach to customer registration. Organizations can work with payment providers to set up smart verification systems that filter out fraudsters, without inconveniencing legitimate customers.

3) Using technology wisely: APIs, instant payments, and real-time monitoring make it possible to identify and block suspicious transactions immediately without freezing entire accounts. Artificial intelligence also plays a crucial role: machine learning algorithms can detect patterns invisible to humans and identify suspicious activity in real time. For businesses where speed is essential, this creates the perfect balance between security and user experience.

The Challenges of New Payment Methods

But as mentioned earlier, the playing field for fraudsters is constantly shifting. New payment technologies such as stablecoins offer advantages for faster international transactions but also introduce new risks. Fintech companies and regulators like the AFM are therefore working together on clear frameworks to enable innovation, without compromising security.

From Cost Center to Competitive Advantage

Fraud can be approached in two ways. You can treat it as a problem to be solved reactively with ever more checks. Or you can see it as an opportunity to make your organization stronger and more innovative when it comes to fraud prevention. The first approach leads to higher costs and slower processes. The second ensures that security, transparency, and innovation reinforce each other. For organizations that want to grow without losing trust, the choice is clear.