As Remote Work and Travel Normalize, SMBs Tackle Challenge of Payment Fraud

Michael Nardy, founder and CEO of Electronic Payments, explains why having a trusted partner for payments protection is so important to SMBs.

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Michael Nardy admitted his recent family vacation to England was his first leisure trip to Europe. For the founder and CEO of a globally recognized merchant services provider, he mentioned this somewhat apologetically. The trip, however, which featured ample shopping opportunities with his two daughters, revealed a bit about the future of payments.

He hopped on a bus with a simple tap-on screen that registered his fare. Most stores his family shopped in did not accept cash, and ATMs were virtually nonexistent. He could send a payment to someone on his contact list from simply connecting it to his payment card via his mobile phone.

“It’s almost [like] if you didn’t have a payment card, whether it’s tied to a bank or credit line, you couldn’t function,” Nardy said. “That’s just going to accelerate faster. And we’ll see what kind of fraud comes with that.”

Since remote work has become normalized and more people — like Nardy — are traveling for business and pleasure, bad actors have had ample opportunity to fine-tune their methods and force businesses across many industries to focus more on digital fraud prevention. Fraudsters, however, have a knack for catching up to technology.

As more advanced digital solutions move into the point of sale (POS), merchants must take a pragmatic view of protecting their transactions and customers. Through a quarter-century of growing Electronic Payments, that is exactly how Nardy has approached providing payment processing, POS and technical support for small- to medium-sized businesses (SMBs) across the United States and internationally. Electronic Payments now has a staff of 150, a network of more than 1,000 agents and a successful combination of cutting-edge technology, transparency and dedicated service.

Fraud has been especially problematic as merchants have dealt with successive headwinds, such as the pandemic, supply chain disruptions and rising inflation. Merchants need money coming in, and they will do just about anything to ensure they can receive a payment — even if it might bear the earmarks of fraudulent activity, Nardy said.

He said he sees a leveling off from pandemic-fueled spikes in fraud among his company’s merchants as they have adopted new fraud-fighting technologies, such as a properly formulated online shopping cart with 3D Secure. Issues can still persist, though, such as peer-to-peer (P2P) payment fraud.

Smaller retailers and mom-and-pop shops seem to struggle the most in keeping up with fraud because they are often so distracted by day-to-day operations and so dependent on revenue coming in that they are unable to recognize an attack that could be prevented with the right help. Nardy noted how posting a simple electronic payment link on a website — one that might be without IP filtering, for example — can be downright devastating, considering how easily card-testing fraudsters can access and use the payment link to do their dirty work.

It is for this reason that Nardy brings a boutique approach to clients, aiming to fully understand their specific businesses and potential vulnerabilities and educating them on how they can play a role in defending their revenue. When he founded Electronic Payments, Nardy was barely 20 years old, and he would talk to every potential customer about their pain points.

Nardy said he believes that merchants need to find someone with the expertise to help them navigate payment options and fraud defense. Trust is key, and being open to a conversation with a consultant can pay huge dividends, especially for those companies with remote operations or frequent business travel.

“It’s really our job as the acquirer to assist that customer and explain to them and say, ‘Look, you got this chargeback because you took this type of payment and you didn’t have this particular technology or you didn’t do it in this particular [fashion],’” Nardy said. “‘So let’s work with you to fix that problem so it doesn’t happen again.’”